Six ways to improve cash flow from operations
Take these six key steps to optimize the money you bring in from ongoing, regular business activities.
1. Stay on top of your books
Regular financial reviews allow for a true understanding of when cash comes in and when it goes out. Cash projections provide a periscope to the future. Consider using online banking alerts to track your finances.
2. Understand your business trends
Just as your business enjoys peak sales and revenues in some months, other months may not be as lucrative. Having a grasp on such details can illuminate broader sales forecasting trends.
3. Know your vendors
Understand your vendors' terms and conditions. Strategically plot a payment plan to capitalize on credits and discounts, and avoid penalties and late fees.
4. Use credit wisely
Consider a variety of credit options: A line of credit can provide a bridge for short-term challenges, while a credit card facilitates purchases that should be paid off in a month.
5. Protect your cash flow
Disciplined spending helps keep expenses from eroding cash levels. Set aside excess income during good months to ease dips in weaker months. Also, business insurance can buffer the impact of unusual circumstances.
6. Keep track of your invoices
Help ensure speedy delivery of payments for your products or services by following up on any late receivables. In addition, offer multiple payment options to your customers to make it easier for them to pay you on time.
Learn more about creating cash flow forecasts.