How to Maintain Positive Cash Flow in Properties
Though you may have plenty of properties, it does not mean that you are already on top of your game. Indeed, success in the business is determined by the positive cash flow and not on the number of properties. As you know, your investment will not keep on growing if your properties do not give you good returns in the form of cash.
Basically, cash can be obtained from a specific property in many ways. It can come from sales, collections, assets, and the like. But as easy as it can be gained, it is also easy to melt away. In order to avoid bankruptcy, it is always necessary that you have properties that give you only positive cash flow. Though this is not a simple task, it can be achieved the right way simply through these following techniques:
Spend less. Once you are out buying things, try to buy used goods rather than new ones. Buy durable yet cheap products for your business and recycle some goods. In short, be a wise spender. Bear in mind that you need to spend less than what you earn to maintain a positive cash flow with your property.
Be wise about contracts. Long term contracts and installment plans
can lead you to a negative cash flow. Therefore, always study the property and make enough analysis and calculations of the price over the expected income. If you think you will not get good cash from a contract, it is best to buy it in cash rather than in installments.
Collecting receivables. Being certain on billings, payables, and
collections of the properties you are operating can efficiently improve your business' cash flow. Focus on payments made by every customer to minimize mistakes or make up front deposits once you are in sales.
Be strict in credit requirements. Concentrate on the credit
requirements for your customers in the business. You can encourage them to pay in cash for your products or services. This will improve the amount of cash in your business and lessen the bad debt possibilities. However, in cases when you will offer installments, make sure to check the customers' credit histories and see whether they are capable of paying whatever they are getting from you.
Increase your sales. An increase in sales means an increase in cash
flow. Even when the sales are largely on credits, the amounts receivables will widely increase the income as well.
Payable management. Pay all your obligations efficiently then hold
into the cash by managing every payable you have. Remember that bad credit history may ruin the reputation of your business.
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