Business Credit Center

Five tips for improving your cash flow

Consider these five tips for getting a handle on your business's cash flow.

Published: August 08, 2016
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Five tips for improving your cash flow

Sufficient cash flow is a key element in demonstrating your business’s viability to potential lenders. But too many small businesses are impaired by poor cash flow, which can be caused by anything from inadequate pricing to trouble collecting receivables.

As you prepare to apply for credit, use these five tips to improve your cash flow.

1. Accelerate your inflows

Send invoices immediately, follow up quickly, and offer multiple payment options to bring in the revenue. Consider offering rewards or discounts to customers who pay promptly.

2. Monitor your costs.

Track all regular bills and due dates, understand how often your inventory turns, and know your payroll obligations. You might try using software-as-a-service (SaaS) to help simplify this process.

3. Watch your outflows.

Use business credit cards, rewards programs, volume discounts, and even barter arrangements to conserve and control cash payments. This is when it can be particularly helpful to have strong relationships with your suppliers and vendors.

4. Cover your taxes.

Take the time at the beginning of each month to estimate how much you’ll need for various taxes, including employment tax and sales tax. Then, set aside an appropriate amount to cover all your taxes and make your cash flow more predictable.

5. Challenge yourself.

Are you getting maximum value from every relationship and expense? Are there expenses you can cut without affecting profitability? Continually reassess your expenses to check for any changes to your financial situation as your business grows and evolves.

Learn more about creating cash flow forecasts and the importance of a cash flow statement.

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