We made it! It’s Friday! Today we cover a client email about cash flow. What does an increase in a company’s accounts receivables do its cash flow? It doesn’t help it! Money owed is great on the balance sheet, but not in the bank account. In this episode we cover payment terms on both accounts receivables and payables and some guidelines for making sure the company cash flow stays in a good place. Check out the website for more content www.bcbousa.com

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Full Recap:

It’s Friday! We made it! Good job everybody. It was a busy week and at times it got overwhelming, but we have a lot to celebrate and be thankful for. In today’s episode we cover a question from a client regarding cash flow. It is a topic that comes up all the time because cash flow is extremely important to the overall health of a company.

The question was straight forward – I am super busy and completed a lot of work recently and my bank account is not reflecting it, why? The answer is fairly simple – an increase in accounts receivable is a negative to your cash flow. Money promised is not the same as money in your bank account and unfortunately will not help you pay your bills. As a company grows and gets busier the balance of maintaining a positive cash flow can become more difficult. 

The easiest way to help manage your cash flow is to have clear payment terms on both money owed to you and money you owe to your vendors. As you grow your business and develop good credit, establishing payment terms with your vendors is extremely important. Being able to receive goods and services that are not owed immediately will help you be able withstand the wait of incoming payments from your customers. 

For money owed to you by your customers, it is again important to make sure that you have clear payment terms and a good practice of following up with them to ensure timely payments. A few simple steps you can take is to simply call or email immediately after sending an invoice to make sure they are happy and satisfied with the work you completed. You catch more flies with honey and good customer service can go a long way to making sure your check gets mailed out sooner rather than later.