Small Business How-To: Increasing Your Cash Flow
Every small business knows that you live and die by cash flow; a business isn’t likely to survive with a continual shortage of it. Therefore, knowing how to increase your cash flow can guarantee you have the cash you need to cover costs and grow your business. While not all of these will work perfectly for every business, these suggestions can help your small business stay cash flow positive.
• Your clients or customers should be funding work, not you. Depending on the type of work or project to be completed, consider requiring partial payment when making sales.
• Make sure your accounts receivables is operating as efficiently as possible as a way to increase cash flow. Consider allowing your customers to pay via credit card, check or even online and always bill on time.
• Work a deal with your bank about getting a business line of credit opened in case of an emergency or to help you cover a decrease in cash flow for short periods of time.
• Don’t offer a 30 or 60 day window for payment to be made after work is completed, your terms should be payment to be made in full upon completion of the work – no exceptions!
• Encourage customers to pay earlier rather than later by offering incentives or discounts for doing so.
• Do not complete additional work for or send new product to customers late on payments. Notify them that you will be temporarily suspending work until their balance is paid in full.
• Purchase inventory and office supplies only when necessary and avoid buying in bulk; you may think you’re saving money but actually you’re just tying up cash.
• Hold off on major business purchases whether it’s an Avaya IP office or a new computer until a higher cash flow period (e.g. after a customer pays in full).
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