My father used to own a small photo and video coverage business when I was young and I always wondered why he always asked for a down payment from customers even when he's not given them the final product yet. When I grew up and learned a lot more about the real world, these two words (or sometimes just one word) enlightened me: Cash Flow (or Cashflow).

What is Cash Flow (Cashflow)?

Cash flow is one of the most significant factor for a successful business. It is the lifeblood of your business and is used in your day-to-day operation. It is important that the money that goes in is greater than the money that goes out (income > expense).

There is a good reason why you see the sign "Credit is good, but we prefer cash" on grocery stores. Although this was a thing of the pass (because I rarely see them anymore and stores now encourage the use of credit cards), you can still see a lot of stores giving rewards or discounts when you pay in cash. Because cash is important.

In my small ventures as my own personal sales agent selling different products, I often got into trouble of collecting bills. If you try to be too nice, you're going to run out of business.

How to Efficiently Collect Bills

• Give incentives to those who pay early or those who pay in cash.
• Ask for a down payment
• Set a deadline for all your accounts receivables, you can add additional charges for late payments BUT this must be communicated ahead of time so you are clear on the expectations.

Cash is King

I once attempted to venture into the rice retail business and tapping on my younger brother who had some small exposure in this, I asked him how many rice sacks  we can buy for 10, 000 pesos. He told me with excitement that we shouldn't spend all we have, and reminded me of something that was taught back in high school, Cash on Hand. I'll be discussing this on another post sometime in the future.