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[H1024]How To Do A Cash Flow

by Saptarshi Roy Chaudhury, Sap

For any business to be successful the most important factor is availability of ready cash and maintenance of a healthy cash flow. However, during day-to-day operation of business it is often found to be the most difficult task and every year a big percentage of the small businesses close down for lack of ready cash. Here are some tips that are really effective for small businesses to maintain a steady cash flow.

1)Incentivize Payment: If you are into one of those businesses where the clients tend to defer payments, try to introduce an incentive scheme for immediate payments. If customers would pay at the time of purchase you would not need to worry about collecting receivables and the cash flow will also be maintained at its best.

2)Credit from Vendors: Try to negotiate terms with your vendors and suppliers to get an extended credit period so that you don't need to pay promptly for your purchases. This will delay the outflow of cash from your accounts and less money will be trapped in your inventory. There are suppliers who would even offer a 60-day credit period and with such an extended period to pay you will hopefully have your receivables collected from your customers and use that to pay the vendors. This way you will not have to shell out your own cash or spend very little yet maintain proper supply of your raw materials.

3)Account Receivable Factoring: Factoring of accounts receivables is a very popular and affective way to maintain a healthy cash flow. Businesses that have long gestation period before the receivables could be converted to cash can always factor their receivables to get ready cash as per their requirements. It is particularly easy to factor your invoices if you are dealing with big companies or government agencies because the factors are more willing to take risk with invoices due from large corporations than with small businesses.

4)Ask for Advance: If you are in a business where you provide custom made goods to your customers as per their orders you can always ask them for an advance at the time of starting the project. This would reduce the risk of nonpayment as a part of the payment is already realized. Also, a healthy cash flow can be maintained very easily if you can negotiate a term of periodic payment with the customer, so that the customer pays you in parts as you progress with the project.

5)Savings Fund: Most businesses go through seasonal changes in sales volume, sometimes its good and sometimes it is slow. It is a very good practice to keep away a certain percentage of the total revenue in the savings fund that helps to operate and run the business smoothly during hard times.

All of these tips might not be applicable for your business, however, most of them are and with some effort and strict control on your business practices for few months you can get these things incorporated into your business policy. Once you have done that, you have won half the battle, because these principles are sure to increase and enhance your cash flow thereby helping your business to grow. So if you are still concerned about availability of cash, start working today and it wont be long when your business will have a healthy cash flow.

Most of us step into the real estate market in the hope of making huge profits. The real estate market gives returns for your money like no other market. However, you should know the rules of the game to be in a win-win situation. Property investments entail several other tasks, like maintenance and renovation, which can deplete your bank accounts. In order to sustain high maintenance costs, it is imperative to create a real estate cash flow that can take care of the additional costs, and yet leave you with substantial profits.

One of the best methods of creating a real estate cash flow is to invest in real estate and resell the properties in back-to-back closings. Many investors these days flip their properties in this fashion to maintain the cash flow. However, flipping properties may not be very easy if you are new to the real estate game. You need to be constantly on your toes to ensure that the cash flow comes in as planned. You have the option of flipping properties for a cash payment of the total amount, or a partial amount and a promissory note. A promissory note guarantees you a monthly income for a long time.

For flipping properties, you need considerable amount of cash. If you are considering a mortgage loan, it becomes necessary that you recover the amount from the sale of your property to settle that loan. Investors can opt for the Wraparound transaction. It allows investors to create a new loan without disturbing the first mortgage. The new buyer pays you, and you in turn repay your earlier loan. The difference between the two payments is the cash flow you have managed to earn for yourself.

It may not be very easy for new investors to get liquid cash to circulate in the real estate market. However, you can invest in a joint venture by finding a partner who has a good credit limit and provable income. As partners, you also have the option of forming an LLC, or a Limited Liability Company, of which both have a fifty-fifty percent partnership. The next step is to find good real estate in middle class neighborhoods that are usually at least ten percent cheaper than other properties.

After finalizing a particular property, execute a resolution through the LLC that the investor partner is planning to buy a property in his name for the benefit of the LLC. The resolution should subsequently be followed by the purchase of the property. As agreed upon earlier, your partner investor will use his own down payment and credit to pay for the property. After the purchase, your partner investor needs to advertise it for sale, specifying credit not required. When considering offers from prospective buyers, focus on those that will pay at least ten percent more than the appraised value of the property. Ideally, choose a buyer who is willing to put down ten percent or more as a down payment. The investor gets the funds to recover his initial investment, while you enjoy part of the cash flow earned from the deal.

Seller financing is also a good option if you are looking for convenient payment options. Seller financing eliminates the hassles associated with credit check and delayed funds when obtaining home loan from the financial market.

Article Source : Real Estate Auction Company

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Both Saptarshi Roy Chaudhury & Kris Koonar are contributors for EditorialToday. The above articles have been edited for relevancy and timeliness. All write-ups, reviews, tips and guides published by EditorialToday.com and its partners or affiliates are for informational purposes only. They should not be used for any legal or any other type of advice. We do not endorse any author, contributor, writer or article posted by our team.

Saptarshi Roy Chaudhury has sinced written about articles on various topics from Finances, Site Promotion and Marketing. . Saptarshi Roy Chaudhury's top article generates over 9900 views. to your Favourites.

Kris Koonar has sinced written about articles on various topics from Site Promotion, Certified Public Accountants and Culture and Society. are easy with Real Net USA's easy process. Using little or even no money down you can own a. Kris Koonar's top article generates over 550000 views. to your Favourites.