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What is the number one way to prevent failure in business? Take a minute to really think about your answer. What comes to mind? Increasing patients or customers served? ? Effective marketing? ? Location Wholesale Matt Chapman Jersey , location, location? ? Improving patient or customer care? ? Being the best in your industry?

Although these are all essential aspects of business, the answer isn''t any of the above. The number one way to prevent business failure is to properly manage your working capital.

To ensure that we''re all on the same page, working capital is simply defined as the difference between your current assets and current liabilities. If this figure is positive, you have working capital available. This working capital may exist as inventory Wholesale Stephen Piscotty Jersey , accounts receivable, or cash on hand.

Working capital management is a critical management issue for growing businesses or medical practices. Take the example of a growing doctor''s office: As expenses rise with patient-load increases, you accrue more outstanding cash, particularly before receiving reimbursement from the health insurance payors. At this point, your incoming cash does not nearly offset your costs going out. This may be manageable while you work with payments for past services; however Wholesale Rickey Henderson Jersey , eventually the time lag may become a significant stress-point for your business.

By adopting a few working capital management strategies, you can make your assets work for you, without becoming beholden to banks.

Strategy #1: Get Paid Now

Let''s take a look at the most obvious area: accounts receivable. What do your receivables do for you when they are not being paid? While your profit margins may look stellar if you have a lot of orders, you have essentially loaned all of your clients the amounts of your invoices-until they decide to pay you. Doctors, in particular Cheap Dennis Eckersley Jersey , know the pain of this situation. Insurance payors are particularly adept at prolonging the time for payment; they realize that the longer they take to pay, the greater their profit margins.

Is this just another cost of doing business? Well, not necessarily. Eighty percent of small business owners, medical practitioners, and small hospitals are completely unaware of a resource Fortune 500 companies have used for decades: accounts receivable funding.

Banks often measure accounts receivable at as low as 50 percent of their overall value as collateral for a traditional loan. In accounts receivable funding Cheap Dave Henderson Jersey , however, accounts receivable are calculated at full value. Plus, you accrue no debt for this financing, as you essentially sell your accounts receivable for payment against the full value.

Perhaps the idea of selling your revenue stream makes you nervous. But consider this: You usually receive 80 percent of the entire amount of the invoice within one or two days-at least 28 to 118 days sooner than usual. This cash injection allows you to make capital improvements for your business to generate more revenue, leverage the cash for discounts on your inventory Cheap Terry Steinbach Jersey , cover operating costs, or provide bonuses to your employees, for instance.

As your invoices are paid, your funder will repay the other 20 percent, minus the negotiated fee (average four to five percent of the invoiced amount). Don''t get hung up on the ''cost'' of the funding. With proper management of those funds Cheap Rollie Fingers Jersey , you will more than make up for fees by the investments made in your business. Your day-to-day business costs may stay the same, but the tremendous increase in incoming cash will enable you to rest easy.

Homework: Review your accounts receivable aging report. Note the average payment time from one of your best clients or insurance payors. Assuming payment of 80 percent of the invoice value in 48 hours, make a list of ways to use that money for your business:



Cash discounts on inventory (estimate in dollar amounts).

Buying or leasing new equipment (anticipated return in additional sales).

New marketing campaign (anticipated additional revenue).



After you total the increased income generated by implementing this strategy, you can easily see the real benefit.

Strategy #2: Shorten Your Operating Cycle

Your operating cycle starts when you take cash out of your account to begin work for a client, and ends the day the client pays you. If you complete a project on Tuesday Cheap Jose Canseco Jersey , for instance, but do not invoice until the following Friday-or even the end of the month-you lose days of income. Since you need the cash in your account-not just in your profit margins-you must minimize the time between service rendered and service invoiced.

Homework: Review how long you usually take to invoice a client. If that period of time exceeds a week, have your staff shorten that time. This adjustment will decrease the payment time by as much as 25 percent.

Strategy #3: Collect Past Due Accounts

Do you have a significant number of invoices out more than 60 days? If so, is your staff doing anything to shorten this timeframe? Call the clients whose invoices have been out 30 days and inquire about the invoice. Devoting a few hours a week to completing this task is money well spent if it ensures that even half of your outstanding invoices are paid a couple of weeks earlier.

Some delays in the healthcare industry, for example Cheap Catfish Hunter Jersey , are intentional. Prolonging the turnaround for payment controls costs. In these cases, you don''t have any recourse. As any doctor can tell you, calling the insurance company to inquire about a claim can be a fruitless task.

Homework: Review your collections procedures and tighten up your ship, if needed. Assign one person to follow up on invoices outstanding for more than 30 days. Realize, though Cheap Mark McGwire Jersey , that collections results fluctuate with your clients'' priorities. Don''t count on this as your only means of improving your cash flow.

Strategy #4: Turn Existing Equipment Into Cash

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