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Project Cash Flow Checklist:
- Refine and double check each project estimate along with working plans elaboration;
Optimize estimates as your work specifications become more profound. Avoid underestimations.
- Predict and avoid cash-flow shortages that may impair normal project operations;
Prioritize the critical operations and protect them against possible cash shortfalls.
- Consider ways to reduce direct and indirect project costs and overhead expenses;
For example outsourcing can be a solution to minimize expenses on some functions.
- Seek multiple stage payments for services in order to retain more cash at your hands;
Aspire to use progressive payments in order to minimize cash outflow: bill as soon as work has been done or order fulfilled.
- Negotiate extended (increased) credit from the project suppliers;
Increase the credit limits provided to you by your suppliers and use barter to acquire goods and services where it is possible.
- Pay promptly only when worthwhile discounts or benefits are offered;
Use your business credit card to pay for supplies.
- Consider depositing project funds until they are actually in use;
You may deposit project cash in a bank to earn some extra income passively. Put excessive cash to produce value in a high-interest savings account.
- Understand all contract terms and make sure conditional wording is safe to your cash-flow;
- Sell off or lease some unused or unproductive assets to convert them into cash;
Sell all obsolete or excessive inventories and assets.
- Reduce amount of inventory in stock (economize on storage space);
Control purchasing function to ensure the project doesn’t become overstocked.
- Lease assets (where it is possible) instead of buying;
Consider leasing a unit of equipment, vehicle, or IT system instead of purchasing it.
- Extend debt repayment periods;
- Accelerate incoming cash-flow from customers:
- Increase sales with cash payments (sell additional services and packaged offers);
- Offer a small discount to customers who pay early;
- Increase prices for slow payers (add late payment charges or fees);
- Decrease the amount and time of credit provided to customers;
- Intensify collection of payments and be less tolerate when granting credits;
- Focus attention of customers on terms and conditions of sale and late payment penalties;
- Defer some project features or benefits which cannot earn acceptable cash paybacks;
Sometimes it makes sense to reduce amount of work (to make a trade-off on the project scope) to withdraw poorly paying project features for the sake of a faster project payback;
- Install and use effective accounting system of your choice.
That system can be used to invoice customers, pay bills, and track the cash-flow of your project.
- Promote a corporate culture...
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