7 Tips for Improving Your Cash Flow

Cash flow is often the biggest and most immediate concern for entrepreneurs. It is defined as the total amount of money coming in and out of a business. Positive cash flow means that you have more revenue than expenses. Negative cash flow is where you are paying out more to vendors and lenders that you are bringing in from customers. Here are some tips that can help your business stay in the black with positive cash flow.

Use a Business Savings Account

If you deposit your revenue into a business savings account, you will be able to collect interest on your profits. It may seem small at first, but it will add up over time and create a nice cushion for you.

Take Out a Small Business Loan

While taking out a loan may seem counterproductive to improving cash flow, there are several reasons that are not the case. If you have a seasonal business, the loan can cover expenses during slow times and be repaid when you’re in your profitable season. A small business loan or line of credit can also help you upgrade resources like equipment and facilities, which can increase your profits quickly after they are in place and essentially pay for themselves.

Pay Vendors Right Away

An essential component of improving cash flow is knowing how much money you have. Get debts off the books as quickly as you can. Good or bad, this will always help you know where you stand.

Invoice Immediately and Collect on Time

It’s very important to send invoices as quickly as you can. When expenses are top of mind, customers are likely to pay quickly. While you can’t control when customers will pay you, you can influence it. Consider providing a small discount for clients who pay within a week of receiving invoices. You may also add a late payment penalty for clients who stay in arrears.

Constantly Evaluate Operating Expenses

The cornerstone of improving cash flow is controlling the amount of money you pay out. Always look for opportunities to save, whether it means changing vendors, or cutting unnecessary services.

Sell Off Old Inventory

Depending on your industry, old inventory and pricing may be impacting your cash flow. If you have old product lining your shelves, discount it deeply to make room for new items.

Expand Your Sales Territory

Finally, you should always be looking for opportunities to serve untapped markets. The best way to improve cash flow is to generate more revenue!


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