Strategically Speaking: 19 Tips for Better Cash Flow Management
Capital Spending
12. Delay Investment: Many firms have established policies calling for replacing desktop computers every three years. Except in cases where the organization has identified significant productivity gains and/or a spike in maintenance and repair costs, investment in new computers typically can be deferred for at least 12 months beyond the equipment’s projected life.
13. Lease Versus Buy: While a lease adds financing costs to the cost of acquisition, leasing has significant cash advantages as it spreads the acquisition cost over the life of the lease, with cash being disbursed over a 24- to 36-month period versus a lump-sum disbursement due immediately after acquisition.
14. Outsourcing: One of the most significant benefits of distribution outsourcing is capital conservation. The outsourcing partner provides all of the necessary capital—warehouse, customer service and billing systems, and in many cases the outsourcing partner now offers access to digital asset management resources that the publisher otherwise might be forced to build themselves.
Receivables Management
15. Accounts Receivables: Ensuring that receivables are collected according to terms is perhaps the single most important step a publisher can take to avoid cash-outs. Collections should be a proactive process with the customer being contacted several weeks before the funds are due to confirm that the payment is on schedule.
16. Outsourcing: An additional benefit of outsourcing customer service and distribution is an increase in the predictability of cash receipts. Most contracts for distribution outsourcing include provisions for scheduled remittance of funds to the client/publisher with the distributor assuming the risk of any delays in collection.
17. Rights & Permission Income: Rights and permission revenues often are managed with less rigor than receivables from book sales. Rights arrangements often have multipart payment schedules and may be billed outside the conventional billings system. These revenues should be managed through accounts receivable and managed as aggressively as conventional receivables.
