1. Check Customers' Credit HistoriesDecide the type of customer to whom you want to extend credit. Do you want to have a particular cut-off credit score? If you extend credit to customers with questionable credit histories or low credit scores, you may experience late payments or no payments, which will slow down your cash flow and increase your collection costs.
2. Keep Track of Your Customers' PaymentsHave up-to-date payment records. Keep accurate payments records by using a specialized accounting software program that will keep track of your invoices and when payments are made. If customers are late with their payments, it could cause a cash flow bottleneck for you. Accurate recordkeeping will help solve this problem.
3. Set Appropriate Credit Terms and Offer a Cash DiscountMake sure your customers understand how long they have to pay their bill. In order to speed up the cash they pay, you might want to offer a cash discount to any customer that pays in a short period of time, designated by you, or to a customer who pays cash.
4. Extend Your Timetable for Making Cash PaymentsPay your bills on time and take advantage of any cash discounts your suppliers offer you. However, hold onto your cash as long as possible. Don’t pay bills weeks earlier than they are due. Your company can use that cash balance, rather than letting your supplier use your company’s cash.
Even in a recession, you can increase your sales. It's not the time to increase prices. Keep prices the same or consider deep discounting. If you don't accept credit cards or sell online, consider both strategies. Take a look at these tips.