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25 WAYS TO IMPROVE STAGNANT CASH FLOW

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https://www.globalbankingandfinance.com/what-is-accounts-receivables-on-the-balance-sheet/Successfully managing your cash flow is your core purpose as an entrepreneur. If you maintain a positive cash flow, you’re doing good business. However, nothing lasts forever. Even the best companies sometimes get out of sync with their beat.25-ways-to-remedy-a-s

Often, it might not even be your fault. Business is an ecosystem. An event into the other side of the country or even city can disrupt your flow and throw you off balance.

For such an occasion, here are 25 ways you can help improve your cash flow and continue with business as usual.

Managing your accounts receivables:

  1. Send out your invoices as soon as possible

One of the biggest problems you’ll face is invoices being paid with delays. For that reason, you should always prepare them as your work goes by. Send them the minute your product or service is completed and collected.

  1. Chase your unpaid invoices

Always keep track of your unpaid invoices. Make the best effort to continuously chase your debtors and remind them to pay in time. It’s alright to pressure your clients if they overextend their payment period.

  1. Schedule step payments for long lasting contracts

If work on a long contract, or deliver a big shipment, try to negotiate step payments throughout the course. This will enable you to access your funds as you need them and maintain your business operations.

  1. Offer discounts for a quick repayment

Making discounts might sound like a counter-intuitive thing to do. But just consider how late payments will affect your cash flow. Most of the times a stagnated cash flow will result in either lost money or lost opportunities to earn money. Thus, making a small discount might actually even save you funds.

  1. Introduce an interest for late payers

Often, you’re able to include a penalty clause in your contracts with your clients. Whenever they overextend their payment period , you will gain interest on your earnings. These are rather rarely enforceable. However, having it on paper will create a passive pressure for your clients to pay in reasonable time.

  1. Use an invoice finance company

If you have no quick way to access your account receivables, you can always turn to a factoring company. This is a way to receive funding based on your unpaid invoices. You will pay a small fee on your total earnings, but you will gain 70%-90% of your invoice values in 24 hours. Thus, you should have enough money to continue your operations.

Manage your outgoing payments:

  1. Schedule step payments for big purchases

If buy a big stack of materials or hire sub-contractors, making a big payment might dry you out of working capital. Try to negotiate a step payment plan with your vendors. Most of the time they won’t object if they are receiving scheduled repayments.

  1. Negotiate billing dates to coincide with revenue payments

Sometimes your earnings arrive just a few days late to meet and cover your own business expenses. Usually, you can foresee such discrepancies. Negotiate a billing date with your vendor that will factor the date your funds arrive.

  1. Research better prices or deals for your most common purchases

Your cash flow problems can be simply because you buy from the wrong supplier. You might pay unnecessary high prices for your stock. Research your supplier options. Find out if you’re not driving yourself out of business.

  1. Negotiate discounts from your vendors:

If you have a good relationship with your vendors, perhaps you can use that to nudge their prices a bit. Perhaps, you might negotiate yourself a discount for regularly paying early. Or, you might offer them a payment in cash for a slightly reduced price. Cash payments are always more valuable than other types of funds.

  1. Make “on time” payments to avoid suffering interest

Plug out potential funds sinkholes by continuously repay all your debts. Mortgages, business loans and credit cards should be repaid in the order of closing out the smallest debt first. If relatively equal, target the one with the highest interest rate.

Managing your existing funds:

  1. Keep working capital in an interest-bearing account

You can store your working funds into a checking account that grants a small interest for you. There is often a requirement for minimum balance at most banks. But, with careful moderation, the interest can offset some processing costs throughout the year.

  1. Keep an emergency fund at a hand’s reach

Emergencies tend to occur when you’re least capable of handling them. When they do, you’d better be prepared to dish out a chunk of cash. This way your business can continue operations and you can work to recover those. Otherwise, you’re faced with having to withdraw emergency loans with huge interest rates.

  1. Avoid large, long-term savings accounts

If you put most of your capital into long-term saving accounts, you will receive the most merit out of your funds. Yet, if something happens and you need them to cover up some business costs, you have a problem. Most good interest accounts have penalties for breaking the term. First, you lose all your accumulated interest. Then you’re likely to suffer real financial loss in the face of penalty interest.

  1. Avoid loans if you’re barely meeting business ends

If you’re barely on top of your cash flow, it’s a bad idea to take on a loan, unless absolutely mandatory. If something bad happens (and, at some point, it will) you’re going to have a rough time. A loan will help drain your balance. Unless you find a way to inject funds into your business you might go into bankruptcy.

Managing your business assets:

  1. Rent out unused operational space

 Maintenance  for your empty warehouses might not be much, but it’s still coming out of your pocket. If you plan on using them again soon, just rent them out for profit. Otherwise just put them on the market and channel your cash somewhere else.

  1. Liquidate unused or dated equipment and vehicles

Dorman equipment that doesn’t meet your business requirements anymore should be sold or salvaged. If you’ve outgrown your old vehicles or machines, you should release their capital. Use that to fund your upgrades or just add to your savings. In any case, unused assets require storage and maintenance, while they don’t generate profit.

  1. Balance your excess of stock and raw materials

It’s often difficult to judge how much raw materials you need for your production. Sometimes, sales might overcome your estimates and you will find yourself in a shortage. Without the materials to continue production, you will lose out on potential sales. Yet, buying more than you can put to use can be even worse. Excess stock quickly loses its value. It might even become obsolete by the time you’re able to effectively use them.

  1. Sell inventory you can’t use effectively

When you own stock you can’t or won’t use for whatever reason, find a way to sell them as fast as possible. The price of any equipment and material in stock can only go down. Sell them while they still have decent prices, before they become obsolete and worthless.

  1. Optimize inventory and storage

If you often find yourself with obsolete stock, maybe you should rethink the way you store and use it. Perhaps, a new inventory system can reduce the amount of excesses. Thus, also reduce the size of purchases. Same goes for storage. Maybe you can squeeze your assets effectively and reduce the storage space and save on rent.

  1. Setup your tax planning as early as possible

Tax can sometimes overwhelm an enterprise that otherwise maintains a good business flow. There are many subtle tricks to minimize your taxes, while maximizing your gains. The most notorious is claiming your business expenses. There are a myriad of expenses that you can claim and reduce your taxable profit.

  1. Repair and renovate before you buy

Try to make it work with your current equipment. New equipment is expensive and you don’t have time to play on the market. Swapping old for new at a low price is a great deal, but don’t make this your priority. Your priority is to have your equipment working to continue your sales and earn profit. Repairs and proper maintenance gets you there faster.

  1. Buy used equipment if possible

If you hunt for related businesses in foreclosure or bankruptcy, you can find perfectly good assets for pennies. Even if you don’t, you can almost always get decent machines at fraction of the cost of brand new ones. These can serve you well and last years, without breaking the bank.

  1. Delay upgrades until your work requires

Tech and vehicle upgrades are overrated. Scrape away the marketing lustro and you will see that new upgrades rarely add enough value as to pay themselves off. Of course, if you do happen to pile severely outdated assets, your own operations might require you to upgrade.

  1. Don’t forget about salvageable scrap

Do you have old assets laying around that have practically zero market value ? Remember that they are probably still salvageable. Try to identify parts that you can sell separately. Or, you can use in repairing your other vehicles and machines. The rest, you can sell for scrap.

There go our 25. There are many more tips and tricks to achieving a balanced and stable business cash flow. Do you have a trick that works for you ? Have you hacked cash flow management ? Share your knowledge in the comments below !

Factoring Solutions is an independent broker for invoice finance companies and services. We work with business owners and provide free consultation about their factoring needs. Then, we provide a no obligation recommendation to their choice of factoring company.

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Hong Kong’s Cathay Pacific warns of capacity cuts, higher cash burn

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Hong Kong's Cathay Pacific warns of capacity cuts, higher cash burn 1

(Reuters) – Cathay Pacific Airways Ltd on Monday warned passenger capacity could be cut by about 60% and monthly cash burn may rise if Hong Kong installs new measures that require flight crew to quarantine for two weeks.

Hong Kong’s flagship carrier said the expected move will increase cash burn by about HK$300 million ($38.70 million) to HK$400 million per month, on top of current HK$1 billion to HK$1.5 billion levels.

Hong Kong is set to require flight crew entering the Asian financial hub for more than two hours to quarantine in a hotel for two weeks, the South China Morning Post reported last week, citing sources.

“The new measure will have a significant impact on our ability to service our passenger and cargo markets,” Cathay said in a statement, adding that expected curbs will also reduce its cargo capacity by 25%.

The airline, in an internal memo seen by Reuters, requested for volunteers among its crew who could fly for three weeks, followed by two weeks of quarantine and 14 days free of duty, adding it will be a temporary measure and not all its flight will require such an operation.

“We continue to engage with key stakeholders in the Hong Kong Government,” the memo said.

The government did not immediately respond to a request for comment.

Separately, a company spokeswoman said the airline could not detail the impact on vaccine transport specifically in terms of cargo shipments.

The aviation industry has been hit hard by the COVID-19 pandemic as many countries imposed travel restrictions to contain its spread.

In December, Cathay’s passenger numbers fell by 98.7% compared to a year earlier, though cargo carriage was down by a smaller 32.3%.

($1 = 7.7512 Hong Kong dollars)

(Reporting by Shriya Ramakrishnan in Bengaluru; Additional reporting by Jamie Freed in Sydney and Twinnie Siu in Hong Kong; Editing by Bernard Orr and Arun Koyyur)

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Travel stocks pull FTSE 100 lower as virus risks weigh

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Travel stocks pull FTSE 100 lower as virus risks weigh 2

By Shashank Nayar

(Reuters) – London’s FTSE 100 fell on Monday, with travel stocks leading the declines, as rising coronavirus infections and extended lockdowns raised worries about the pace of economic growth, while fashion retailers Boohoo and ASOS gained on merger deals.

The British government quietly extended lockdown laws to give councils the power to close pubs, restaurants, shops and public spaces until July 17, the Telegraph reported on Saturday.

The blue-chip FTSE 100 index dipped 0.1%, with travel and energy stocks falling the most, while the mid-cap index rose 0.1%.

“Stock markets are crawling between optimism around the rollout of vaccines and worries that a jump in virus infections and fresh local lockdowns could further affect recovery prospects,” said David Madden, an analyst at CMC Markets.

Britain has detected 77 cases of the South African variant of COVID-19, the health minister said on Sunday while urging people to strictly follow lockdown rules as the best precaution against the country’s own potentially more deadly variant.

Prime Minister Boris Johnson had earlier warned that the government could not consider easing lockdown restrictions with infection rates at their current high levels and until it is confident that the vaccination programme is working.

The FTSE 100 shed 14.3% in value last year, its worst performance since a 31% plunge in 2008 and underperforming its European peers by a wide margin, as pandemic-driven lockdowns battered the economy.

Online fashion retailers Boohoo and ASOS surged 4.8% and 5.9%, each. Boohoo bought the Debenhams brand, while ASOS was in talks to buy the key brands of Philip Green’s collapsed Arcadia group.

Recruiter SThree Plc gained 0.9% after its profit, which nearly halved, still managed to beat market expectations and the company said it had resumed dividends.

(Reporting by Shashank Nayar in Bengaluru; editing by Uttaresh.V)

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Top 8 Tax Scams to Watch Out For

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Top 8 Tax Scams to Watch Out For 3

It is tax time and that means finding the best way to file your taxes and to get a refund of any amount you’ve overpaid. Unfortunately, tax time also means plenty of scammers are thinking of new and clever ways to try and get their hands on your money or on your personal information (which they can use to get money).

Those who specialize in IRS tax scams are clever and can be very convincing. Your first line of defense is to always know what to be looking for in terms of common tax fraud in order to avoid being another victim.

8 Most Common Tax Scams

Protecting yourself from IRS tax scams can be tricky if you’re not aware of what the threats are. A good tax scam seems legitimate, and that is what makes them dangerous. Always be on the lookout for the eight most common tax scams, including:

  • IRS Phone Scams
  • Fake IRS Emails
  • Fraudulent Tax Preparers
  • Fraudulent Tax Refunds
  • Fake Charities
  • Set Up Offshore Accounts
  • Empty Promises
  • Frivolous Returns

To know what exactly you need to watch out for, let’s look at them in more detail.

1. IRS Phone Scams

If someone calls you claiming to be from the IRS, it is almost certainly one of many IRS phone scams. The IRS will never call you to demand money for back taxes or to confirm your personal information, so be immediately alert. Never give personal information over the phone, and don’t head to the bank to follow the demands for money.

If you do wind up on the end of an IRS phone scam, don’t become flustered by aggressive tactics by the fake “agent”. They are good at sounding threatening and demanding information or payments. Remain calm and ask for contact information. Tell the scammer you’ll call them back with the information. Either the scammer will give you fake information or he will work to avoid leaving any information at all. Regardless, don’t call him back. Simply report the call to the local police or the IRS.

2. Fake IRS Emails

Another very common fake IRS scam is phishing, or sending fake IRS emails, in a ploy to gather personal information. Fake emails will look authentic and will ask you to click on a link or to log in to a fake IRS website. The purpose of these emails is to simply gather your personal information to be used for other fraudulent purposes.

Just like with IRS phone scams, you should be immediately wary if the IRS appears to send you an email. The IRS does not contact citizens through email. All official IRS communication will come through standard mail. If you do find a fake IRS email in your inbox, forward it to the IRS. The IRS investigates these scams and has a dedicated email address for this very purpose: [email protected].

3. Fraudulent Tax Preparers

Some scam artists show up in a suit, open a storefront and offer to prepare your tax return for you. These tax preparers appear by all accounts to be absolutely legitimate, and many go to great lengths to convince customers of their years of experience and authenticity.

As a fraudulent tax preparer, however, the person is not legitimate. The scam artist can use your tax return in many ways for his own benefit. He can inflate your refund and skim off the top. He can charge outrageous fees for filing on your behalf. He can file your return correctly this year and gather all of your information to make a fake return for his benefit next year.

If you are going to have someone else prepare your taxes, be sure to look carefully through tax service reviews. Tax service reviews are available on many different websites that offer feedback on companies and services. These reviews will give you a very good idea about the legitimacy of the business and the reliability of the preparer. If a company doesn’t have any tax service reviews on any website, like e.g PissedConsumer.com, or BBB, that may be a sign that it’s a pop-up company that will disappear as soon as the scammer has what he wants.

4. Fraudulent Tax Refunds

Another very popular tax scam starts well before the tax season. To file a fraudulent tax return, the scammer must gather all pertinent personal information including a social security number. He then uses the information he gathered to file a fake tax return on your behalf. Naturally, he’s not going to send you the refund he’s claiming – that goes into the scammer’s pocket.

The best way to prevent a fake tax return is to guard your personal information close at all times. If nobody is able to steal your identity, they can’t file a tax return. Another good step is to file your own tax return as early as possible. That way, even if your information was stolen somehow, you will get your refund correctly and the IRS will be alerted when someone files a second return using your information.

5. Fake Charities

Charitable donations are tax-deductible if you’re itemizing your deductions. This creates possibilities for scammers to take advantage of others who are looking to reduce their tax burden and increase their refund by making donations. Fake charities can take on many shapes and forms.

Some may appear conveniently around tax time or be affiliated with fraudulent tax preparers. The claim is that by donating to a fake charity you will help others and reduce your own tax liability. Instead, you’re giving someone free money and you won’t be able to deduct the donation as it’s not a real charitable organization. Other fake charities involve you in a scam by promising to give you back your donation as soon as the tax return is filed, for example. It goes without saying that claiming a donation you didn’t actually make is tax fraud and highly illegal.

At the advice of his tax preparers, a famous country singer Willie Nelson moved some of his money into tax shelters and charities to help reduce his tax bill. The IRS grew suspicious of the moves and investigated. In one of the most famous IRS cases in the United States, Willie Nelson was hit with a tax bill in the millions when his charities and shelters were found to be invalid.

Willie didn’t have the funds to make the payments, so the bill continued to grow until the IRS finally grew so frustrated they raided and seized all of Willie Nelson’s properties including a recording studio, a ranch, and his home. Even that wasn’t enough to pay the bill, so eventually, Willie made a deal with the IRS. He recorded an album and all proceeds from that album went directly to the IRS to whittle away his debt. Willie did file suit against the accounting firm that advised the tax shelters in the first place, but the two parties settled out of court.

6. Set Up Offshore Accounts

Some tax scams sound good but require your participation in illegal activities. For example, you may meet an unscrupulous tax “professional” who offers to help you move some of your money into an offshore account.

This sounds legitimate as many people use offshore accounts for valid reasons, but by moving your funds into an offshore account with the intent of hiding that income from the IRS, you’re committing tax fraud. Additionally, if you’re working with a shady professional, it’s highly likely that neither you nor the IRS will see your extra income ever again. And you can still wind up with a legal case with your money stolen and gone.

7. Empty Promises

The tax preparer who encourages you to sign a blank tax form is nobody you want to work with. These preparers encourage you to simply sign the form because he or she is going to work out the numbers for you so that you can get the highest possible refund. If you do this, you are almost certainly subjecting yourself to tax filing scams.

Signing a blank tax form is potentially worse than simply signing a blank check for a stranger. Not only are you at risk of losing your personal information and any refund you might be owed, but you are also at risk of legal action by the IRS for signing your name on a refund that is almost certainly going to contain false and fraudulent information.

8. Frivolous Returns

The IRS sees a ridiculous number of what they call “frivolous returns” every year. A frivolous return is a tax return that is filed with the intent of simply wasting time. These frivolous claims have already been thrown out in court, so filing a tax refund making a frivolous claim is simply opening yourself up to additional action by the IRS including fines of at least $5,000. The top “frivolous claims” include:

  • Refusing to pay taxes on moral or religious grounds
  • “Opting out” of paying taxes
  • Invoking the First Amendment to “protect” you from taxes
  • Claiming only Federal Employees pay federal taxes
  • Claiming you have no income and therefore no tax liability (when you clearly do)

Top 3 Tips on How to Protect Yourself from IRS Tax Scams

Protecting yourself from tax fraud is a matter of being vigilant and mindful that there is always a possibility of something going wrong. Work with a trusted advisor or study up and file taxes yourself to avoid the uncertainty of allowing others to handle your financial matters. Often a bit of knowledge goes a very long way.

1. Know How the Tax System Works

One of the most common negative IRS reviews is that the tax refunds aren’t released immediately. In many IRS complaints, customers complain that they don’t get their refunds immediately.

While frustrating to wait, the IRS is usually very clear about processing times and has never sent refunds immediately after the filing window opens. The government doesn’t move quickly and reviews of documents and financial information submitted in your returns are necessary.

Additionally, relying on others to help you file your taxes every year can open you up to the possibility of fraudulent activities. Reviewing the tax codes and reading through the laws and requirements may not be exciting, but it will give you at least a basic understanding of how the process works so that you can look out for problems if you are trusting someone else with your information and money.

2. Always Read Carefully

The safest way to file your taxes is to do them by hand on the original IRS paper forms and to mail them using certified mail. Many people don’t choose to do this, however, as it can be very tedious and confusing if you do not know the tax system backward and forwards.

Instead, many filers rely on tax software and paid tax preparers. When using software or allowing someone to use the software on your behalf, it never gets too comfortable. There might be hidden fees in the software or glitches to overcome.

Reviewing choices carefully as the software takes you from screen to screen is a good way to avoid accidentally accepting hidden fees. Another option to avoid paying for fees you aren’t comfortable with is to simply abandon the return on one piece of online software and to try again with another – there are multiple tax return software options available.

3. Always Look for Tax Filing Scams

If you always expect to find a scam, you’ll never be surprised when one appears. Even tax preparers who have been in business for years can have some deceptive business practices that others assume are necessary or haven’t noticed them at all.

Tax time can be exciting if you’re entitled to a large refund, but it can be stressful if you don’t feel in control of the tax filing process. Educate yourself on the risks and tax scams that exist, and always exercise caution when choosing a method to file your taxes. Your personal information is closely tied to your money, so protecting both of them is often simply a measure of keeping your eyes wide open and using your knowledge to avoid traps and scams.

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