As a Small/Medium business owner, your immediate reaction is to start screening (and sometimes screaming) outside of your company for cash. You are on the lookout for friends and family investments, borrowing, bank overdrafts, bank loans, capital increase, or a private placement…
Look no more, the money is often within your company’s operation.
Solution 2 of 3– The Scaling Up CASH Acceleration Strategies © helps you understand your own unique Cash Conversion Cycle (CCC).
Verne Harnish has identified four distinct areas that are part of this cycle: Sales, Production & Inventory, Delivery, and Billing and Payment. One of the keys to improving cash flow is to shorten these cycles to make your money available sooner:
To shorten your sales cycle, you need to consider, for example the steps you can take to speed up the time it takes to move someone from a prospective client to a customer.
To shorten your Production & Inventory Cycle, you ought to look for ways to improve your production schedules and move the inventory faster. The shorter this cycle, the sooner you’ll have cash on hand to fuel your growth.
To shorten your Delivery Cycle you can start by eliminating delays between taking an order and delivering the goods or services. Is later delivery impacting your collection?
To shorten your Billing & Payment Cycle, you need to investigate the reason why some clients are slow to pay. Are you sending the invoice on time? Is the client satisfied with the product or service? Are you clear with your payment term
