Achieving positive cash flow really depends on a number of factors. For example, the higher the cost of startup, the longer it may take to achieve a positive cash flow. Other factors such as growing the business will also impact this area of management. The best recommendation to improve cash flow is to shorten collection periods and to lengthen billing payouts. For example, many companies operate on net 30 and net 60 because the desire to be competitive with other clients. However, this type of billing may not be suited for small companies which need to pay payroll weekly or biweekly. The length of collection should be shorted to COD or to net 7 or net 10 to speed up cash flow. Certain businesses have terrible cash flow problems. Construction companies often experience cash flow problems because they operate on budget set by the builder. They might only be able to collect a portion of the costs to begin work and will not receive the rest of their money until they have completed the job. But delays and unforeseen problems can often be enough to place a chokehold on cash flow.
There is definitely and give and take when it comes to making judgments concerning cash flow. Some companies have policies that they will only pay bills quarterly and if vendors desire to deal with them they will have to adhere to this demand. Personally, I believe that companies should operate on short collection periods. The use of long term collections processes only creates problems. There is really no reason that most businesses need to pay on a net 60 or net 90.