The objective of any business strategy is to generate profit. In the short term, the objective is to generate sufficient liquid means to meet payment obligations, so that the company is capable of generating cash flow. To find out, it is vital to analyze the Statement of Cash Flows. This report reflects how is the management of the sources of cash and the needs required by the operational, investment and financial activities of the company.
Actions that help generate cash flow:
In the current situation of lack of liquidity in companies, it is vital to manage them based on the culture of generating cash flow, at the strategy level and in the different operating areas. We cite some actions that can be carried out.
To gain efficiency in managing accounts receivable:
-Check that the customer and invoice data are correct. Streamline the generation of invoices and their delivery as much as possible
-Prioritize collection actions in accounts with the highest amount of clients with good payment behavior
-Perform pre-collection actions, for example, send clients their statement of account a few days before the expiration of the invoices
-Offer discounts for prompt payment or other advantages to certain customers
-Negotiate a payment plan with risk coverage with delinquent clients and those who present risks of delayed payment
– Frequently review the collection forecasts. These should have a higher risk of late payment or defaults from customers