Accelerating Cash Inflows

Cash inflows are the movement of money into your business. Inflows are most likely from the sale of your goods or services to your customers. If you extend credit to your customers and allow them to charge their purchases of your goods or services to their account, then an inflow occurs as you collect on the customers' accounts.

It should be fairly obvious that accelerating your cash inflows will improve your overall cash flow. The quicker you can collect cash, the faster you can spend it! That may not sound very businesslike, but it's true. Accelerating cash inflows allows your business to pay its own bills and other obligations on time, or even earlier than required. It may allow your business to take advantage of trade discounts offered by some suppliers if you pay them within a certain period of time. And it will certainly make the other aspects of cash flow management easier.

Understanding the cash conversion period is the first step in accelerating your cash inflows. Then, you must streamline: