What's Your Cash Flow

Days to Cash

If you send out invoices and wait for payments, this article can help you to improve your cash flow by reducing your ‘days to cash.’ Days to cash measures how long it takes you to convert your costs and inputs such as employee time, inventory, products and services, into cash.

Action Steps

You can dramatically improve your days to cash by:

1. Deposits-obtaining a deposit at the time of order.

2. Frequency-invoicing frequently at convenient times for you, upon milestone or completion, and definitely more often than monthly.

3. Speed-invoicing quickly after the provision of services. Don’t wait for the freight bill! Make an educated estimate and send it out.

4. Electrons-Setting up your customers for automatic payments or electronic payments.

5. Visa/MasterCard/AmEx-Accepting credit cards instead of issuing invoices and waiting for snail-mail cheque payments.

6. 2%-Giving discounts for prompt payment within ten days of invoice date.

From The Piggy Bank

Your business can only grow as fast as your cash flow supply.