Possible Solution - Are You Giving Out To Much Credit?

Giving out credit to your customers may be a great selling advantage. The only two disadvantages you may run into are:

Are You Giving Out To Much Credit?

Giving out credit to your customers may be a great selling advantage. The only two disadvantages you may run into are:

ONE: You run the risk off not getting your money back!

TWO: You run the risk of getting into cash flow problems with your business.

For example, if you are paying your supplier cash after a standard 30 days, and you're giving your customer 60 or 90 days to pay, you can easily see how you can have a cash flow problem fast.

Here are a few tips to reduce cash flow problems:

• Keep enough cash in a fund to cover the time difference.
• Subcontract the financing for your customers.
• Get more time to pay your suppliers.
• Give special discounts for your customers who pay cash.

Careful planning of your cash flow vs. receivables (payments from customers) will reduce surprises that may appear due the problems inherent in providing credit.