Manage your company cash flow

Money is at the heart of all company operations and expansion projects. You must therefore work to make your business profitable and to maintain or improve your company cash flow.

Aim for profitability

Even though reducing your prices may stimulate sales, the resulting drop in profitability means you won't be able to count on these sales for growth. Sooner or later, selling at a discount will affect your company's viability. Profits are necessary for your company's medium-term survival. Find out what your break-even point and costs are before you set your selling prices. Determine what your profit margin should be and maintain it.

Manage cash inflows and outflows

Manage your cash inflows and outflows in such a way as to maximize your cash flow and make it work for you. To this end, your accounts receivables are an important source of cash flow for your company. Make sure your billing, payment collection and bank deposits are done as efficiently as possible to maximize inflow of cash. Don't hesitate to work out billing agreements with your customers providing for staggered payments at specific stages of production or product delivery.

Managing cash outflows means paying your bills in a timely and cost-effective way. Just as customers request a grace period before paying your invoices, so should you negotiate 30-day payment terms for amounts due to suppliers.

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Do you do business abroad?

Your accounts receivables may be more at risk. Political risks may make account collection or payment more difficult. Selling your international receivable or taking out credit insurance could help you limit your losses.

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See Desjardins Factoring.

Find short-term financing

If you have seasonal sales or your cash flow fluctuates a great deal from month to month, you could probably benefit from a line of credit. A line of credit can help you effectively manage your company cash flow and meet day-to-day operating needs.

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See Operating line of credit.

Keep your inventory to a minimum

Keeping an inventory or raw materials you will only need several months down the line or a high finished product inventory is a source of unnecessary cost to your company and generates no revenue. Finding a way to keep your inventory low is a way to increase your company cash flow. Use your imagination: look into IT solutions, just-in-time delivery or revise your work methods to substantially reduce your inventory and raw materials.