Entrepreneurs don’t need an expert to tell them how important cash is to their businesses. They consider it to be the lifeblood of their organizations. Without this vital resource, their entire market operations eventually come to a halt. In such a situation, they have no option but the file for bankruptcy. However, monitoring the inflow and outflow of money within their concerns is no easy task. Many of them face a common problem. These proprietors may be on the verge of earning huge profits in a financial year. Yet they still don’t have the monetary resources to meet their expenses for the same time period. This is where proper cash flow management comes into the picture.
Peter Zieve How can entrepreneurs overcome a cash crunch situation?
Peter Zieve is the brainchild behind the establishment of Electroimpact, Inc. It is one of the most prominent business organizations in Mukilteo, Seattle. He has a long association with this prominent engineering company since its inception in 1986. The corporate organization attracts the best and brightest individuals specializing in the field of engineering. They consider it a privilege to work for a concern which recognizes and harnesses their full potential. They take full advantage of the concern’s unique internship programs. This University of Washington Ph.D. graduate has the honor of holding important posts in the organization. This includes Chief Engineer, Chief Executive Officer (CEO) and even its President. Today, he running for public office in the city of Seattle. It is his way of making a positive contribution to society.
Dr. Zieve says it is not uncommon for businesses to face a cash crunch. However, entrepreneurs shouldn’t take this problem lightly. It can ruin the long-term prospects of their concerns. Even recent research shows it is the cause of corporate bankruptcy. These proprietors need to take adequate measures to improve cash flow positions. He suggests they should adopt the following important two steps to achieve their objective:
- Conduct commercial activities with creditworthy customers
All entrepreneurs endeavor to sell their products or services at a good price in the market. To attract a larger target audience, they will offer their customers reasonable payment terms. However, they soon end up with slow-paying clients. These individuals generally clear their dues after frequent reminders. Proprietors need to avoid such a situation. It aggravates their organization’s cash flow position. They end up finding it difficult to conduct their market operations properly. This is why these owners should only conduct commercial activities with creditworthy businessmen. They have a reputation for settling their dues on time.
- Revamp invoice collection
Many entrepreneurs may make generate adequate sales in any fiscal year. However, they don’t pay enough attention to collections. This, in turn, creates a cash crunch situation for them. Once they sell any of their products, such businessmen need raise invoices on their customers. Such terms of such documents need to clear, to the point and unambiguous. Their clients need to understand essential aspects of such paperwork. These include the description of the commodities they buy, the price, total sales value and terms of payment. Only then will these individuals settle their dues on time.
Moreover, such a step doesn’t give rises to discrepancies at a future date. The owners could even consider offering attractive discounts to encourage their clients to make prompt payments
Peter Zieve says a cash crunch can play havoc on entrepreneurs’ market operations. They certainly don’t want to face such a situation. They need to do their utmost to improve their cash flow position to avoid it. The above two important steps can help them achieve their objectives.