Follow the 5 P’s to Avoid Cash Flow Problems
Having the necessary cash flow is essential to running a successful business. However, even when it seems like your operations are successful and you have plenty of clients or customers, your cash flow may be in jeopardy if you are regularly owed outstanding debts. Not getting paid in a timely manner can disrupt your cash flow and your ability to support your operations. While you can never entirely prevent unpaid debts, you can take steps to ensure your cash flow is protected. We commonly refer to these steps as the “5 P’s.”
People – You should be able to rely on the people who you work and deal with. Your team should be trustworthy with strong decision-making skills so their work will only have a positive impact on your overall business. If you have employees who make shady deals or do not follow through, your business can suffer.
Policies – Having policies that govern how every aspect of your business is handled is key. Have a policy for how you memorialize agreements, how and when you are paid, how you control and manage your inventory and cash, how you contact suppliers and clients, and more. Having clear-cut policies can help minimize people trying to make up their own rules.
Procedures – Ensure that your operational procedures are as efficient and effective as possible. This may not only save you time and money but can ensure the job is done correctly, thereby instilling faith and loyalty from customers.
Profits – Understand that your profits are more than simply a number on a monthly bank statement. Instead, profits can include your overall capital growth and the value you are building in your business over time. Having a greater perspective than month-to-month profits can help you identify when changes may need to be implemented.
Planning – While you hope for the best, you should always plan for the worst so that you are prepared if the unexpected happens. Have proper insurance and have methods of collecting debts when your cash flow is impacted.
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At Central Mercantile Collection Services, we help businesses succeed by providing professional and reliable debt collection services so that owners can focus on the 5 P’s and the overall success of their operations. We are ethical and reliable in all of our debt collection efforts, and if you would like to learn more about the services we offer, please call for a consultation today.