Three Easy Ways to Increase Cash Flow

January 11, 2017
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Growing your company’s revenue is likely a priority for you as a business owner.  Aside from just selling more or doing more, you can make some operational adjustments that can positively impact your cash flow.  Here are three things to consider when you decide that cash flow is something you need to improve.

Plan, plan plan.  Take the time to create a detailed forecast, taking into account seasonality of your industry, supplier timelines, ordering deadlines, and so on.  By having a week-by-week forecast, you can accurately plan for large expenditures and build up the cash reserves needed or if appropriate, line up the affordable financing that makes sense for your business.  This planning will help you avoid having to take last minute cash advances that can negatively impact cash flow, which is the opposite of what you are trying to accomplish.

Review your payment terms.  By evaluating your supplier and customer terms, you can determine if there are changes that could positively affect your cash flow.  If your payables are shorter than your receivables, this creates a need for you to float those days between paying your suppliers and receiving payment from your customers.  This negative cash flow means you have to secure working capital to get  by.

Look at the terms on both sides of the equation and determine if they work for you and your customers and suppliers.  Do your suppliers stack up well compared with their competitors?  Are there discounts for early or cash payments that you aren’t utilizing?  There may be opportunities to make changes or adjustments that could make a big difference.

Make it a priority.  If improving cash flow is important to you as a business owner, it is imperative that you get buy in across all levels of your company and have all team members invested.  By setting motivational goals, regardless of role, employees will strive to meet them, all the while driving the company toward the overall goal.

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