Home
>
Small Business
>
7 Tips To Improve Your Cash Flow

7 Tips To Improve Your Cash Flow

Cash is King?That is what everyone tells us and it is true! You cannot function successfully in any business without proper cash flow. So if this Cash Principle is so well known, then why is it that so many businesses struggle? Sometimes the obvious is not always so obvious when you are entrenched in running the day-to-day aspects of your business. Here are 7 Tips to Improve Your Cash Flow!

1. Cash and Carry. Operate a cash and carry type business versus worrying about receivables. The best business plan is one where customers pay at the time of purchase so you don't have to worry about invoicing or collection procedures. Invoicing and collections take up valuable time, so you want to come up with creative ways to incentivize payment immediately. Set the ground rules in the beginning so your clients know what you expect.

2. Receivables Collection. Collect your receivables in a prompt manner. Don't let them hang out there forever until your customers decide they want to pay you. Being a good steward of your business is "good business", so have a process in place for invoicing and collections. The longer your receivables are outstanding, the less likely you are to collect. You don't have to be mean and rough to collect promptly from your clients. A good rule of thumb is that you should always have a due date on the invoice and then send out a follow-up statement within 10 to 30 days from the due date. Each industry and business environment has different insights as to what is the "ideal" time. I would not send follow-up correspondence any sooner than 10 days past due. Payment may just be delayed by the mail; however, waiting longer than 30 days is too long. If you have not received payment within 45 to 60 days of the due date, then a phone call should be made to follow-up with your customer. Accounts that go past due 90 or more days should be taken to the next level of collections with an outside agency, internal collection "ninja" or any other mode you have established for collections. Find what works best for your business and stick to it. Each day that you are delayed in receiving payment is an additional cost of doing business. Time is money.

3. Receivables Funding. Implement an accounts receivable funding program. Factoring of accounts receivable has become very popular and it can be a great way of keeping the cash flowing. Businesses who deal with large businesses or government agencies lend themselves to utilizing factoring programs. If your clientele is made up of small businesses or individuals, you may find it more difficult to establish an accounts receivable funding program. Why? Funding companies are monitoring risk. There is less risk with larger companies or government agencies. Or so they think!

4. Vendors. Negotiate terms with your vendors to help delay the outflow of cash payments. Lots of vendors have payment terms where you can delay the payment until end of the month or maybe even up to 60 days. This allows you a little float time to use their money while you are working on your project. Then hopefully you'll receive payment from your customers prior to needing to pay for the products you purchased. Some companies also go the route of consignment. Then you are selling someone else's goods and don't have your money wrapped up in inventory. This option can help you increase your product offerings without having to invest large amounts of money in inventory.

5. Customer Deposits. Have your customers pay a deposit prior to the start of the job. This will help you cover your upfront costs as you start the projects. It's very common to have a deposit with the signing of your contract. It decreases the risk associated with nonpayment because you've received a portion up front. You can also implement periodic payments throughout the contract vs. a single payment upon completion of the project so that cash is flowing in consistently.

6. Revolving Credit Line. Establish a revolving line of credit through a lender to help you with potential cash flow crunches. Especially if the amount of savings from prompt pay discounts are greater than the financing charge from the lender or the lender's financing charge is less than what your vendors might charge for late payments. This helps give your business a safety net so that you can continue to operate during those times when you are offered great specials if you buy today but may not have extra cash available.

7. Savings Fund. Establish a savings fund to help you operate through slow times. Most businesses have swings in their business flow and managing cash effectively can be a challenge. Store away extra during the good times to help alleviate issues during the slow season. I know this sounds easier than it is, but if you take out a percentage each month and transfer it to a savings account then it will be "out of sight and out of mind."

You may find that each of these 7 tips is viable for your business, or maybe only 1 or 2. Anything that you can do to focus on better cash flow will provide benefits to your business. The worst thing you can do is sit back and "hope" that things go well. Look around! See those "CLOSED" signs on the surrounding shop windows? They played the "hope" game and lost. What are you going to do? Hope? No?implement a plan for cash flow management starting now.

Contact: Pam Newman is a Certified Management Accountant, Author, and Certified QuickBooks? ProAdvisor for Financial and Point-of-Sale software.

For more information, visit her website at http://www.quickbooksinformation.com or call 816.304.4398. QuickBooks? is a registered trademark of Intuit. RPPC, Inc. is a third party provider of training for QuickBooks?, and is not part of Intuit.

shuttle from O'Hare Bingham .. Lockport Chicago limo O’Hare

In The News:

Attackers use caller ID spoofing and AI voices to steal money. Tech expert Kurt “CyberGuy" Knutsson provides seven ways to protect yourself.

Tech expert Kurt “CyberGuy" Knutsson talks about the Genesis GV60 MIV, an electric rescue EV with snow tracks for extreme missions.

Tech expert Kurt “CyberGuy" Knutsson helps you ensure a smooth online experience with a reliable, secure home network setup.

Kurt “CyberGuy" Knutsson talks about Vollebak’s Shielding Suit, which blocks EM radiation, infrared and tracking for privacy.

Even Apple products are vulnerable to cybercriminals, and a new report suggests the owners of Mac products will have to be more vigilant this year.

An inflatable six-person tiny house from a firm called 2001 looks like a space station with its inflatable dome that is transportable and eco-friendly.

Scams cost Americans an estimated $159 billion every year and average about $3,500 in losses per victim. The CyberGuy has advice to protect yourself.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents

Zeekr and Waymo are joining forces for the world's first mass-produced autonomous vehicle, combining an electric vehicle with self-driving technology.

A humanoid robot training center has opened in Shanghai, a big step in China's efforts to become a global leader in robotics and artificial intelligence.

Security experts have discovered that hackers are targeting apps on the App Store to spread malware that steals information from saved screenshots.

A new luxury SUV combines military-inspired design and high-end luxury transportation and includes two military-grade gas masks to protect against chemical warfare.

80% of stalking victims are tracked using tech. GPS trackers, like AirTags, are among the most popular ways to do it. Here's how to protect yourself.

Stay up to date on the latest AI technology advancements and learn about the challenges and opportunities AI presents now and for the future.

Kurt "CyberGuy" Knutsson explains how to protect yourself against artificial intelligence-fueled romance scams, which have become the most common type of fraud in 2025.

Kurt "CyberGuy" Knutsson explains the steps to declutter text messages on a Mac or iPad. Apple offers ways to do this more efficiently.

Here's how to take control of the algorithms on Facebook, YouTube, Instagram and TikTok if your social media feeds aren't showing you content you want to see.

Beware of iCloud scams using urgent messages. Tech expert Kurt “CyberGuy" Knutsson helps you spot the red flags to protect yourself.

Travel abroad worry-free with these top translation apps for travelers. Tech expert Kurt “CyberGuy" Knutsson highlights some favorites.

The European Space Agency's Euclid space telescope was going through preliminary tests in September 2023 when it captured images of an Einstein Ring in a nearby galaxy.

Tech expert Kurt “CyberGuy" Knutsson says hackers are using Microsoft Teams for phishing, vishing and quishing via social engineering.

Red light camera tickets: Not liable to ID the driver; some are fishing expeditions. Tech expert Kurt “CyberGuy" Knutsson helps you fight back against tricky fake tickets.

The apps collecting the most data about you are among the most widely used. Kurt the CyberGuy takes a look at 20 of these apps and how you can protect personal information.

AST SpaceMobile of Texas is developing the world's first global cellular broadband network that can connect directly to your smartphone without special equipment.

Community Health Center, a Connecticut-based healthcare provider, has disclosed a recent data breach affecting over 1 million people in the U.S.

7 Tips To Improve Your Cash Flow

Small Business