Like most entrepreneurs, you probably face a peculiar problem. The sales figures for your organization may be increasing at a significant pace. As a result of this, you also expect a corresponding rise in profits. This makes you confident that your business is thriving. However, you should take a closer look at your establishment’s finances especially the cash flow position. There may be a lot more than meets the eye. Financial experts say a severe cash crunch can ruin even most successful businesses. Before they know it, the owners of such organization may have to file for bankruptcy. This is not the type of situation you want to be in.
Arnon Dror LinkedIn How to tackle a cash crunch situation in your business?
Arnon Dror is former vice-president of Xerox Technology Business’ finance department. This MBA graduate from Hebrew University has more than 20 years of valuable experience under his belt. He has made a name for himself as international executive specializing in various fields. These include supply chain optimization, strategic planning, internal control, international taxation, mergers, and corporate negotiations. He is also responsible for the success of many businesses in both the public and the private sector. In fact, you just need to browse through Arnon Dror LinkedIn profile on the internet. This can give an insight into his impressive track-record with various corporate organizations. He is also a strong advocate of economic empowerment.
This financial professional says it is common for businesses of various sizes to face cash flow problems. Many proprietors consider it part and parcel of conducting their activities in the market. However, they should not take such issues lightly. A cash crunch has the potential of ruining their businesses. He suggests they should take the following 3 important steps to tackle such situations:
- Raise invoices on customers immediately
After successfully selling their products on credit, entrepreneurs need to raise invoices on their customers. They need to ensure such documents are in proper order. This helps to prevent possible disputes arising in the near future. Moreover, they should clearly state the terms of payments on such paperwork.
- Introduce rewards for prompt payment and boost collection efforts
Research show entrepreneurs face cash crunch situation because they don’t focus their attention on cash collections. They need to ensure their clients repay their dues on time. Otherwise, these businessmen won’t be in a position to clear their liabilities. This can affect their market operations. They should introduce rewards in the form of special cash discounts to customers who make prompt payments. At the same time, they should also penalize slow-paying offenders. This may encourage them to settle their outstanding dues within a short time. In the worst-case scenario, they may consider taking legal action.
- Monitor inventory
Entrepreneurs need to realize proper inventory control is critical in ensuring they don’t face a cash crunch. Keep unnecessary stock ties up their cash. They have to keep aside money to pay for insurance, storage and carrying costs. They use such resources more productively in other important areas of their businesses. This is the fact they cannot overlook.
This financial specialist has been instrumental in converting loss-making businesses into profitable organizations. Many of them with severe cashflow difficulties. You just need to go through Arnon Dror biography on the internet to know the truth of this fact. Implementing the above 3 important measures can help you overcome such situations in your organization.