We start the discussion by focusing on the core activity. Businesses will need cash at all time, but often the money is stuck up with creditors, as inventory or simply with the sales team. Rather than pin pointing each issue, it is important that businesses start to incorporate all activities at once to free up as much cash as possible.
The inventory level must be handled efficiently where a business ensures that the stock doesn’t get piled up. Plan properly on how the stock will be sold. Sometimes selling in bulk will be a wise option, where you will be able to maximize revenue, along with lowering your costs. Communicate with the sales staff and get the invoices on a daily basis. Make sure that customers pay on time, which can be done by setting an extended leverage limit at the first place rather than asking them to pay back their dues.
One must plan for certain unexpected events. Your sales level will be affected due to a new entrant, or an uncertain change in market trend. A company should asses any potential risk factors with practicality and objectivity.
By keeping customers in the loop, a business is covering two major aspects. Firstly, it will help them plan inventory levels by increasing or reducing the production of a particular good. Secondly it assures retention of prime customers.
Irrespective of the size of your business, make sure the issue is addressed on a broad basis with no break in communication channels. For instance, the information must be uniformly delivered to all departments so that cash made at one place can be used at another.