TR E A S U RY MANAG EM ENT
CONSIDERING CREDIT?
SPEEDING UP RECEIVABLES
AND SLOWING DOWN PAYABLES
Commercial cards can improve cash
flow with cash back rebates.
Improving Cash Flow
CASH FLOW MANAGEMENT is about striking a balance that
leaves your business in the black once your expenses are paid
and your earnings are received. To do this, you should strive to
collect your receivables as quickly as possible (without causing
conflict with your customers) while slowing down your payables
(without jeopardizing your relationship with suppliers).
Doing so can maintain the amount of cash on-hand for
day-to-day operating costs such as payroll, credit payments,
and office space. The following strategies may help improve
cash flow in your company and demonstrate how thoughtful
account receivable initiatives today can prevent problems in
accounts payable tomorrow.
Forecast your cash flow.
The first step to optimizing your company’s cash flow is knowing
where it currently stands and where it is likely to go in the future.
Keep track of your payables and receivables on a week-to-week
basis, and you will have a much better idea of what lies ahead.
Seek discounts from payables.
Separate your regular suppliers from one-off purchases. Try to
establish a good relationship with your regular suppliers, and
they will be more likely to negotiate rates, discounts, and payment
dates. If you can convince your strategic suppliers to sweeten the
deal, you may save handsomely on your largest, most essential
expenses. Remember, the goal is to stretch and save. Stretch the
payment due date and save as many dollars as possible.
Reduce costs and enhance
control with Purchasing Cards.
Many payment processes are manual and time-intensive.
Streamline the process, reduce manual check payments, save
time, and generate efficiencies through the use of commercial
cards, which can be used to pay vendors (purchasing) and/or for
employee travel and expenses (T&E). You can potentially generate
revenue for your organization from cash back rebates or rewards,
depending on the program you choose. Plus, flexible reporting
options can allow for smoother account reconciliation.
Encourage early payment of receivables.
The simplest and most common way for businesses to increase
the speed of receivables is to offer discounts to customers who
pay early. This doesn’t have to be a large discount, rather just
enough to encourage your customer to consider paying earlier
and more often. What might come as a slight hit to your bottom
line can be a large boost to your cash flow in the end.
Sterling National Bank can help you improve your cash flow
through thoughtful cash flow management and customized
Treasury Management solutions. To learn more, contact your
Relationship Manager or Client Services at (855) 876-8940.
EVALUATING YOUR TERMS IS CRUCIAL
A key part of the cash flow balancing act is keeping customer terms and supplier terms in balance.
� Look at the terms you’re offering customers. Take time to evaluate whether they’re working for you and your
customers. In other words, how well are your customers performing under your current terms?
� Adjust your receivables’ terms for a win-win. With suppliers, you want to see how their terms compare to others
in the marketplace. You may even discover available discounts for paying earlier that outweigh the incentive to
stretch the due date.
RANKED ONE OF FORBES' BEST BANKS OF 2019 // CONNECT STRATEGY SPRING 2019 // SNB.COM
11