7 Tips to Improve Business Cash Flow

19 July, 2017

No matter what type of business you run, you need cash flow.  It comes in from your customers or clients, and goes out in rent and payroll.  Finding ways to improve your cash flow can be tricky and negative cash flow is often the number one reason small businesses have to close.  Here are eight ways to help improve your business’ cash flow.

  • Know your cash flow. You have two different types of cash flow – positive and negative.  Negative is when you are not receiving enough to pay for all of your expenses.  Cash flow is not quite the same as profit, but it is a similar topic.
  • Make sure your accounts receivables are actually coming in. You may have to put a time term on your bills such as net 30 days, or you may want to offer a discount for those who pay early, and then net a fine on those who pay late.
  • Consider new marketing strategies. This can be anything from offering your current customers reasons to come back to you soon, or trying to attract new clients at places like summer gatherings or welcome wagons.
  • Use credit wisely. Your business credit card is just like any other in that the bill will be due at the end of the month.  Don’t charge more than you will be able to pay off, but use the card to help with temporary shortfalls. This also means be sure you play it safe with your customers if you choose to extend credit to them.   Have them fill out a full credit application and check their credit worthiness first.  Or, just set up your business to accept credit cards that are already issued by a bank that will ensure you get paid.
  • Hire an accountant. If money and balancing books is just not your thing, hiring a professional accountant will be money well spent. He or she can help you with your business taxes and ensure you pay what you need to on time, avoiding any expensive penalties.
  • Don’t fear technology. Some technological devices and programs can be great tools to help you manage expenses and cash flow. There are sometimes freeware programs that will help you with balancing the books, saving you the cost outlay.  You can also look to cloud based programs that you can access from anywhere, so you don’t have to stay in the office to know what is happening.
  • Have a goal. You should do some analysis to determine where your break-even point is so you have a target to aim for with your cash flow and business needs.  It’s hard to know how much to sell if you don’t know where you are going.
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