Part Two: Turning Sales Into Healthy Cash Flow – Taking Practical Action
- Srinath Kondapally
- Jul 19
- 2 min read
How to Pinpoint and Fix the Problem
Review Your Debtor Management
Analyse your accounts receivable. Who owes you money, and how long have invoices been outstanding?
Tighten credit terms, send timely reminders, and follow up regularly. Consider incentives for early payment.
Examine Inventory Practices
Audit your stock levels. Excess or slow-moving inventory consumes cash—adjust ordering and sales cycles to match demand.
Check Expense Discipline
Review all operating expenses and identify areas where cuts or renegotiations are possible.
Assess if expenses align with current business activity and revenue streams.
Analyse Payment Terms and Supplier Relationships
Negotiate better payment terms with suppliers to improve your outgoing cash flow.
Avoid paying invoices too early if not required by agreement.
Monitor Your Profit Margins
Scrutinise pricing and gross margins. Even high sales won’t save you if costs per sale are too close to the selling price.
Regularly Forecast and Stress Test
Create rolling cash flow forecasts to anticipate periods of tight liquidity.
Use simple models to simulate what happens if a big client pays late or a major expense crops up.
Avoid Overextending
Ensure growth is sustainable by aligning expansion plans to your available working capital and future cash flow projections.
Turn Sales Into Cash: Best Practices
Best Practice | Impact on Cash Flow |
Invoice promptly & consistently | Accelerates inflows |
Enforce clear payment terms | Reduces overdue accounts |
Negotiate with suppliers | Delays outflows, preserves cash |
Track cash flow weekly | Early warning for potential challenges |
Maintain emergency reserves | Cuts risk of shortfalls |
The Bottom Line
When sales and cash flow don’t match, it’s not a cause for panic—but it is a sign that processes need attention. With disciplined management of receivables, inventory, expenses, and robust forecasting, you can ensure that your hard-earned sales are converted into healthy cash flow—fueling growth and stability.
