Some practical little nuggets that you could pull the trigger on to improve your cash flow days is to keep less stock on hand – but don’t be doing it so you can’t deliver to your customers, don’t go so low. If you’re a service business, it could be invoicing earlier; don’t wait four months on every invoice. Invoice every week interim bill, or invoice in advance. It’ll save you money upfront, and then your WIP days will be zero or negative – you get it upfront.
There’s this perception that we shouldn’t get paid until we get our work done first, right? There is some business industry where getting paid later is the standard – that’s not necessarily the case. I implore you to challenge that idea, and see what you can do to improve some of those days to keep the cash closer to your pocket, rather than sitting on your shelf or sitting on your balance sheet as debt that has to be collected. It just gives that peace of mind a little bit more as well, when you have cash that’s sitting in your bank account, versus owing money.
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