If you are a business owner, one of the greatest challenges is being able to pay your bills as well as your employees and have sufficient cash left over to meet other daily operational costs of your company. Most of the times, businesses do not have an issue selling. With the help of online and conventional marketing techniques, they are able to generate sufficient sales.
The problem however is actually getting the money from customers, more specifically debtors. A lot of businesses are working on a credit basis with most of their customers. Payment terms range from a minimum of seven days to a maximum of ninety days. The advantages of selling on a credit basis is that you will be able to generate more income. The disadvantage however is that you will need to have sufficient cash flow to sustain your company until you receive the actual payments from your customers.
If customers pay on time and stay within their credit period, all is well. With proper financial planning, you will have sufficient cash flow to sustain your business and the cash will keep flowing as the payments are received. The flow of cash within your business is interrupted when customers fail to pay their invoices on time or when they fail to pay them at all. This is why is very important in any business. (more...)