Cash Gap Strategies

(Strategies to Shorten your Cash Gap)

The Cash Gap is the term we use to describe the delay between the time that a business pays it’s costs and the time when it receives payment from it’s customers (see the graphic below). It’s the one metric that’s most important in a cash flow crisis.

What can you do to protect yourself against these kind of risks? The simplest piece of advice is this – be sure you’re measuring your cash gap and work on reducing it now before you’re in an emergency situation.

The key message here is that no matter how much revenue is rising, if your cash flow and the cash gap is not managed, you could get prepared for any thing to happen. You know what I mean?

You have been warned.

Here you can find Proven Strategies for:

Improving Your Cash flow Position

How Cash Flow Forecasting,

Outsourced Credit Control & Invoice Factoring Could Help

Actionable Steps For Implementing Each Strategy.

 

  • Require partial or full deposit on contract to be paid up front
  • Finish projects so that they can be billed/invoiced
  • Bill/invoice immediately on completion of job
  • Systematize billing/invoicing process
  • Complete the billing/invoicing process on a weekly basis
  • Give 7 day terms instead of 30 days
  • Send multiple bills/invoices with increasingly demanding tone at 14, 30, 45 days
  • Give 1 to 2% discount for early paying of invoices
  • Add and collect interest on overdue accounts
  • Outsource the entire billing/invoicing process to speed up receivables, etc.
  • Reduce inventory by using low inventory trigger points
  • Buy inventory on consignment and pay when sold
  • Negotiate longer terms from vendors

An easy way to understand cash gap