6 Ways to Improve Your Business Cash Flow

All entrepreneurs have a dream of building a long-lasting enterprise that builds wealth. Business owners work hard to grow their businesses, and the life of a fledgling CEO can be stressful–especially when cash-flow is running low.

Building a business that is ripe for sustainable growth means that you need to learn how to manage your business’ finances and operations. By learning to improve your business cash flow, you will be able to meet current obligations and leave room for expansion. To keep your cash-flow positive, it’s important to monitor your income and expenses monthly. Monitoring your cash flow often will help you meet the needs of your customer base and pay creditors on time.

If you find that your business is struggling to keep the cash-flow positive, there are a number of strategies you can try:

Increase Your Sales

If you need ways to improve business cash flow, it just makes sense to sell more products or onboard more clients. But remember that in order to sell more or provide more services, you’ll have to do more marketing. And estimate the costs of marketing and producing your offerings when you calculate your bottom line.

Offer Discounts

Believe it or not, by providing discounts to customers, you can increase cash-flow. Here’s how: if you offer a discount to customers who pay early, you’ll be immediately increasing your cash-flow. However, while discounts are great incentives, just make sure the discount is not so deep that it hurts your profit margin.

Pay Early

Just as you are willing to provide discounts to your customers who pay early, many vendors are willing to do the same. Contact your suppliers and find out if they offer early incentives to businesses who pay their invoices early. You’ll be keeping money in your business and paying your bills off, which is important to building your business credibility and accessing more favorable financing terms in the future.

Secure Business Funding

If your business is facing short-term cash-flow problems, you might be eligible for a loan. Borrowing money from a financial institution can help you meet client needs and to keep your business afloat. Just be sure to make all payments on time and avoid borrowing more than you can comfortably repay.

Check This Out: What Are Different Types of Business Funding?

Expanding Your Accounts Receivable Options

How do your customers currently pay you? If you’re looking for ways to improve business cash flow, provide your customer base with more options to pay you–quickly. According to the Small Business Administration, being flexible about how you collect payments makes your business more appealing and more profitable.

Work With Creditworthy Clients

If your business does work with other businesses, it is best not to extend credit to everyone. Just as other businesses and lending institutions need to check your credibility, you should do the same. Always get a Dun & Bradstreet report on companies that you work with. This report will show your a business’ financial history–what is their credit score? Who are their references? Are they paying their bills on time?

It’s an extra step, but an important one. You’ll be avoiding a potential cash-flow slowdown from a company that cannot afford to pay you on time.

Check This Out: 4 Reasons to Monitor Your Business Credit Often

Cash-flow affects your ability to deliver goods and services to customers, obtain credit, remain reputable and of course, remain open. If you want your business to remain viable, make sure that you analyze your cash-flow monthly, quarterly and yearly. Based on the data, you’ll be able to see where you can make changes and remain successful.