9 Ways to Boost Your Cash Flow

If you have a small cash flow from operating activities, this is a simple yet effective way to increase cash flow. There is no single answer or approach to increase cash flow in the new year, and oftentimes small business owners find that it’s a combination of practices that result in improvement. Take the time to evaluate your operational, payment, and marketing efforts to see how you can increase income and bring more money in while decreasing expenses. This may mean offering online payment options or setting up an auto-deduct option, something that can really benefit cash flow. Cash flow management can be difficult, especially if you have many bills due each month. This is particularly true when you’re dealing with high-interest credit card debt.

Always look for ways to improve your product and invest in smarter solutions. Always consult with a professional accountant before making major financial decisions that could impact the future of your business. To combat this struggle and stabilize your cash flow, you can incorporate several tactics into your business model. One great way to identify new markets is to actively engage the correct social media accounts. With SumUp, you can also accept payments via card readers, mobile payment links and QR codes. Make sure that you’re clear, concise, and specific about all details on your invoice – especially the payment due date.

If you own a retail store, consider adding an online shop that offers curbside pickup and/or shipping. With a few new products or services, you can potentially boost your incoming cash flow. Many of the best accounting software options have built-in digital invoicing tools. That makes it much easier to send invoices as soon as services are rendered. Bank study, 82% of small businesses fail due to cash flow problems. Without sufficient cash on hand, you can’t keep your staff paid, inventory stocked, or the lights on.

Reevaluate Accounts Payable

Accountants recommend that you make the surplus work for you. You can do this by making short-term investments and using the money to pay off debts faster. That way, the money will benefit you through generated interest or shorter loan terms. If you understand cash flow techniques, you can get ahead of the market.

The sweeps happen at the close of business each day, and you can set the amount, typically in $500 increments. For example, if you find that you are anticipating a future need for extra cash, you may want to start talking to lenders about a bridge loan to help pave the way for future financing. Similarly, if you can anticipate large expenses ahead of payout, you’ll be able to plan your other obligations accordingly to avoid cash flow surprises. All of these tips can help you manage and increase your cash flow. Whether you decide to focus on growing your sales, decreasing your expenses, gaining capital — or a mix of them all — you’re well on your way to improving your cash flow. If your restaurant is struggling, consider adding takeout or delivery services or even selling “take and bake” goods or local produce and products to sell in-store.

How to Monitor Cash Flow in a Gym Business

If a business has a positive cash flow, it means that there is more money coming into the organisation than going out. Rapidly growing organisations tend to have more cash to buy stocks, hire employees, etc. Therefore, it is essential to have a look at the organisation’s cash and cash flow.

For instance, send out invoices immediately after the delivery of goods or services. Another idea is to change your payment terms – for example, from 60 days to 30 days. Maybe your coffee shop could start offering homemade lemonade for the summer, or maybe your event planning service could add a cleaning service to maximize business.

What should you do if you have a cash flow deficit?

You can find a lot of extensive breakdowns on cash flow statements. Here are some basic terms and elements of a cash flow statement you’ll need to know in order to create and read yours. Determining when you’ll receive – and spend – money is part of the budgeting process. To successfully project cash flow, assess your prior year’s numbers as a basis of cash flow for the following year. Then, adjust for anticipated changes, such as new pricing, and more personnel and funding sources. An important element of your business model that can help with cash analysis is proper accounting standards.

• It can be comparatively easy to keep track of cash flow and predict sales.
• Nearly one-third of those surveyed are unable to pay vendors, loans, themselves or their employees because of cash flow issues.
• This is why it’s so important that your books are up to date and that you’re tracking everything effectively.
• If your business is strapped for cash, you might want to consider leasing equipment and renting retail or office space rather than buying it outright.
• Adjust the management of your receivables to invoice clients immediately following the delivery of products or services, rather than sending out all invoices on a particular day of the month.

This may also lead to increased production or the ability to take on extra projects, leading to more incoming cash. Another important aspect of managing your cash flow is making sure your business is running as efficiently as possible. Analyze all of your current business processes and judge how efficient the current process is to see if there’s any way to speed up that process. Another great way to expand your market is by letting happy customers do it for you. Encourage loyal customers by offering discounts or implementing rewards programs, such as stamp cards for multiple purchases. This way, you can encourage your loyal customers to grow your business for you through word of mouth.

Meaning that they are regularly testing different terms based on their customer’s needs and replacing any that don’t perform well. Your accounts receivable is listed as a “current asset” on your balance sheet. But on your cash flow statement, you can actually see changes in accounts receivable on a month-to-month basis. Luckily, if you’re struggling to maintain cash flow and need to make adjustments immediately, there are a handful of proven methods you can start implementing today. Through investing, you’re essentially increasing monthly cash flow, even though it’s likely being reinvested for future use.

Utilize Cheap and/or Free Financing Options

Take a look at your sales patterns to see when your busy and non-busy sales times are and order inventory accordingly. Another key to successful invoicing is having a strong invoicing policy. Choose a consistent time when invoices are due (for example, due upon receipt, Net-15, Net-30, etc.) and stick to it.

More money in the bank means more opportunities to hire additional employees, expand operations, invest in new products and services and, ultimately, grow your business. The challenge is getting your cash flow moving at a more efficient speed, allowing you the freedom to invest. As badly as you might want to make the sale, the late payments will hurt your business’s cash flow. If you opt for a sale despite any questionable credit, be sure to set it up with a high interest rate. For instance, if your payables are due before your receivables(money from a sale you haven’t collected yet) come in, you’ll face cash flow problems.

Anticipate and Plan for Future Cash Needs

An expert in accounting, finance, and point of sale, Erica has been researching and writing about all things small-business since 2018. Erica’s insights into personal and business finance have been cited in numerous publications, including MSN, Real Simple, and Reader’s Digest. Small businesses have a lot of funding options, so they should… If you have an idea of cash coming in and going out, you’ll be able to identify ways to reduce expenses to shore up more cash. In the event of a lost or stolen card, contact us anytime day or night to avoid fraud.

• In the case of poor credit, it might be safe to suppose that the payments will not be received on time.
• Also, consider selling off excess inventory items to third parties, even though the prices obtained may be quite low.
• As the year unfolds, you should update your cash flow projections to accurately reflect developments in expenses and profits.
• If you’ve been working with them for a long time, ask them if they can give you a special price on equipment or products by committing to their business for a set period.

As long as you use the card wisely and can afford to make regular payments each month, a cash back credit card is easy money. Here are some of the best cash back business cards for small businesses. If you don’t have the cash to flat-out buy equipment, or you don’t qualify for a working capital loan, it might be worth considering leasing equipment. In general, we tend to advise against leasing hardware as it can get expensive. You lose the advantage of having the equipment as a fixed asset for your business, but you could gain lower monthly payments, which may be what you need to keep your cash flow in check. Invoice factoring is a type of debtor finance that allows you to sell your accounts receivables to a third party.

Inventory is one of the largest business expenses you might encounter. You need inventory to make a profit, but you want to make sure the inventory you’re buying is actually selling. Carefully consider which products sell well and which you have a hard time turning over.

Strategically borrowing money can be a viable option, as long as you have a repayment plan in place. You should monitor your other expenses and make changes where needed. You may have to shift from a long-term investment mindset, such as buying equipment, to a short-term survival mindset, such as leasing equipment. You may want to shift from a monthly invoicing model to one in which you send invoices every time you complete a certain amount of work. For example, if your small business is an advertising agency, send your invoice not on Nov. 30, but whenever you complete a preset number of campaigns, ad spends or other initiatives that month. That money can affect future opportunities, so you don’t want it to sit around.