Anyone who owns a small business — or a large one, for that matter — knows that cash flow is like the circulatory system in the body. The heart has to keep pumping, carrying life-giving oxygen to all of the body’s parts or the whole system shuts down. It’s the same with cash flowing through a business. You can have lots of inventory, dozens of clients and great products, but if you don’t have a healthy cash flow the business can’t function. Consider these easy tips.
10 Quick and Easy Ways To Improve Cash Flow
- Track your Accounts Receivable with software:
There are a plethora of choices available and a good system will pay for itself in no time.
- Establish credit policies:
Assess a customer’s ability to pay. A bank credit reference is an excellent tool. After all, by giving a customer 15 or 30 day terms you are extending credit to them.
- Make billing a priority:
Invoice for goods or services immediately.
- Identify and resolve disputed invoices quickly:
It’s a great idea to establish a policy that escalates any disputes to a decision maker immediately. Good for collections and good customer service as well.
- Make it easy for your customers to make payments:
Always offer an online remittance option if at all possible. Faster collection of cash for you and ease for your customers.
- Review accounts receivable regularly and work them:
An AR report can be generated on a weekly or monthly basis. This allows for quick follow-up on delinquent accounts.
- Offer discounts for early birds:
Everyone loves a deal, and by offering an incentive for your customers to pay their invoices ahead of time, you’re creating an excellent win/win for the both of you.
- Utilize electronic payments for accounts payables:
Electronic payments can be made on the day the payable is due. Keep your cash working for you for as long as possible.
- Establish a merchant account with a credit card provider:
There are fees involved to process; however, you’ll be able convert invoices to cash deposits within 24-48 hours.
- Take inventory of your Inventory:
Items that are moving slowly or not at all are tying up cash. Get that stuff moved out even if you have to offer it at a discount. Remember, inventory is not a collection and you’re running a business not a museum.
By following these tips consistently, you’ll be amazed by how much cash is freed up and available for other things — like marketing, capital investment or a company picnic!