A business should not only have accounting profits but also cash profits in order to be truly profitable and financially stable. When a firm is cashflow positive, it helps the financial stability and liquidity of the company. Cash inflows come into the firm from sales of inventory or services and outflows in the form of operating and general and administrative expenses.When a firm is cashflow positive, it has sufficient funds to meet its expenses and asset purchases and does not require outside funding for meeting expenses.
At Taurus Collection, we help businesses like yours achieve a positive cash flow by streamlining debt recovery and ensuring timely payments from clients. Our expert team employs ethical and effective collection strategies, reducing outstanding receivables and improving liquidity. By partnering with us, you can focus on growing your business while we handle overdue accounts, minimize bad debts, and enhance financial stability. Let us take the stress out of collections so you can maintain a healthy cash flow and drive long-term success.
Knowing the exact amount of money going in and out of the business helps the business to plan for future growth and expansion of the business. It helps the company’s management by facilitating decision making based on accurate financial information.
If the business has an aggressive growth and expansion strategy planned, it has to make accurate capital structure decisions. The business cashflows are an important factor in deciding the proper capital structure, especially if the firm opts for debt in the capital structure. This is because regular interest payments become a part of the expense flows and the cashflows of the firm must accommodate this.
Having positive cashflows means vendor payments are made on time which makes a positive and stress-free business relationship. You will never have to face awkward situations where there is a cash-deficit to make expense payments.
If you are a highly leveraged company, positive cashflows help you to pare down debt and bring your debt equity ratios in sync with the business. This further helps to improve cashflows and improve your overall cashflow by reducing the costly interest and principal repayment outflows.
When debtors extend their credit periods and persistently make delayed payments, or default on their payment dates, you face a cashflow deficit situation. This will impair your liquidity and reduce your cashflows
During financial year end periods, companies have to make their tax payments which reduce the availability of cashflow with them. Some seasonal trends also affect the business of your customers. These may reduce the payments that your customers make
If your budgeting and forecasting exercise is not accurate due to inaccurate data, or if there is improper financial planning taking into account the above factors, this means you can face a poor cashflow situation.
Most businesses are not proactive in maintaining an emergency fund. This emergency fund would normally constitute adequate liquidity to meet operational expenses for six months. This lack impairs a business’ ability to adequately deal with a situation where there poor cashflows
The bills generated by your business for customers and the accounts receivable are a primary source of cashflows. Sending the bills expeditiously when the sale is effected helps in securing early collections. Ensure that you have an automated invoicing system which helps to minimise mistakes as well as set reminders for collection. Having an efficient accounting package and client management system helps to generate invoices early and also with the follow up on accounts receivables. Be persistent in your follow up with clients to ensure expeditious collections. Use discounts and offers to persuade clients to pay promptly. State all your collections policy upfront, including; any penalties and discounts for late payments. Bill discounting is another method of securing early payments though you may suffer a partial loss due to the discounted payments received on the bills.
This helps especially if you encourage clients who make bulk purchases to pay in advance by offering some upfront discounts. This generates cash in hand which helps in proper cashflow planning.
This will help to weed out clients with a poor track record of making payments and whose receivables constantly turn into non-performing assets. This due-diligence will help you in reducing the number of bad loans in a proactive manner.
This exercise helps you to plan and schedule expenses according to the incoming cashflows. This also helps you to list your incoming cashflows and anticipate expense payments. Proper scheduling of expenses is also possible. If your cashflow forecasting is positive, then you can sail through a particular forecasting period with positive net cashflows that can contribute to future expansion and growth.
Postpone all asset purchases that are not immediately required. This will help you to conserve cashflows for more urgent needs. Consider leasing versus buying options as this will limit your cash outflows to much smaller amounts.
It is better to do a periodic expense analysis to identify high value expenses so that you can make adjustments to reduce unnecessary or top-heavy expenses. Streamline the internal processes in your company to reduce expenses, wherever possible.
Put aside some part of your cash profits every month so that you can build an emergency fund that will help ease poor cashflow situations. This must normally cover six months operational expenses. This will help ease poor liquidity situations in the future. Optimise the earnings on your liquidity reserve so that the incoming interest earnings are high.
When you have good relations with your suppliers, this will help you to ask for extension of credit period on your bills and play the float, especially during poor liquidity situations. Don’t hesitate to ask for discounts on bulk purchases and always the prices offered by different vendors before selecting one.
Collection and debt recovery agencies like Taurus Collection India can help in timely collection of receivables in an ethical and transparent manner.
To make your business cash flow positive, focus on increasing revenue while controlling expenses. Streamline operations, optimize pricing strategies, and prioritize high-margin products or services. Implement efficient invoicing and payment collection processes to improve cash inflows. Reduce unnecessary costs, negotiate better terms with suppliers, and manage inventory wisely to minimize waste. Additionally, explore alternative revenue streams and maintain a cash reserve for unexpected expenses. Consistently monitoring and adjusting your financial strategy will help ensure long-term profitability and a stable cash flow.
At Taruus Collection, we help businesses improve cash flow by recovering outstanding payments and managing your account receivables – quickly, ethically, legally and professionally. Our expert debt collection services ensure you get paid on time, reducing financial stress and allowing you to focus on growth. With a customer-friendly yet firm approach, we maintain your business relationships while securing what’s rightfully yours. Let’s work together to make your business cash-flow positive—contact us today!
Taurus Collection is a B2B & B2C collection agency that goes beyond the ordinary. With a commitment to excellence, we offer a ‘No Collection, No Fee’ service that is backed by our in-house advocates with an exceptionally high success rate.
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