Starting a Small Business

10 Advanced Strategies to Drive More Cash Flow to Your Business

10 Advanced Strategies to Drive More Cash Flow to Your Business

Sitting in the desk chair in your office, you nervously analyze your company’s financial statements for last month. You happily discover revenues increased for the fifth month in a row. Unfortunately, you also notice your cash flow situation hasn’t improved. If you can relate to this worrisome situation, you’re not alone. A business can’t thrive, or even survive, without adequate cash. By adhering to the following strategies, you might succeed at driving more cash flow to your business. 

Send Out Invoices Immediately

If improving cash flow is a top priority, searching for ways to speed up your receipt of money is smart. To accomplish this task, you need to receive customer payments more quickly. Therefore, consider sending out invoices immediately after delivering goods or services.

Encourage Use of Payment Cards

By encouraging the use of payment cards, money from customers will be deposited into your bank account quickly. Because many people no longer keep cash on hand, accepting credit cards and debit cards might also boost your sales. Using payment cards may save you the hassle of handling checks and making repeated visits to your bank in order to physically deposit funds. Regardless of whether your business is a brick-and-mortar establishment or an online one, obtaining a merchant services solution will make processing payment cards a simple undertaking. 

Utilize a Business Credit Card 

To boost cash flow, utilize a business credit card when making purchases and paying suppliers. Use your business credit card’s grace period to your advantage. For instance, you might be able to avoid paying for items purchased for up to 21 days after receiving your statement. Certain types of business credit cards also include cash-back incentives.

Perform a Real Forecast

Before you can improve cash flow, you must understand where it stands now and where it is probable to go in the near future. Therefore, performing a real forecast is vital. Consider creating a rolling forecast for 12 months. This practice can help you focus on aspects such as surges in expenses during slow sales seasons and numerous payments due in a short time frame. 

Require a Down Payment on Projects

For extensive projects, require customers to make a down payment. By making this stipulation, your customers will fund the projects instead of your company. 

Evaluate Inventory Trends

Look at inventory trends. Does your company have a ton of cash tied up in inventory items that customers seldom buy? Perhaps, your business constantly runs low on less costly merchandise that sells quickly. Adjusting inventory allocations might help you both improve cash flow and more efficiently meet customer needs.

Factor Accounts Receivables

Factoring accounts receivables involves selling them to a third party who will then bear the responsibility of collecting them. You’ll receive cash immediately instead of needing to wait for possibly 30 to 60 days. In exchange for this service, you’ll pay a nominal factoring fee. 

Obtain a Line of Credit

Obtaining a line of credit to cover emergencies is a better way to control cash flow than attempting to secure a loan quickly. The bank’s interest rate might even be less than late fees vendors charge. You can access your line of credit when you need it. And, you’ll only be charged interest on the amount of funds you borrow.

Invest Cash on Hand

Investing cash on hand is a great way to stimulate cash flow. Select safe investment options that will allow you to access your cash immediately. A high-interest savings account is a great alternative.

Work with an Accountant 

Because possessing adequate cash flow is integral to the success of your business, consider hiring an accountant. This professional can: 

  • Compare cash flow projections with results
  • Discover reasons for discrepancies
  • Anticipate future cash flow problems
  • Assist with developing plans to address future cash flow issues

Worrying over potential cash shortfalls can be a frightening experience for business owners. Without a healthy cash flow, companies must concentrate on staying alive rather than growing. If driving more cash flow to your business is on your to-do list, consider following one or more of the aforementioned strategies.

share this post
Search for matches...
Jeff Donohoe, CPA

Jeff Donohoe, CPA

Jeffrey D. Donohoe CPA is a CPA based in Cleveland, OH. His firm J. Donohoe & Associates LLC has been providing quality, personalized financial guidance to local individuals and businesses. Their specialty is state and local tax (SALT) services and they work with other CPA firms throughout the country consulting on SALT issues. Donohoe & Associates provide tax preparation and accounting services, as well as audits, financial statement, and financial planning.

J Donohoe & Associates LLC
16 reviews

Ohio

Recommended Professionals

In the face of economic uncertainty, TaxBuzz is the industry's most up-to-date tax information.

Join 60,000 who get our weekly newsletter. No spam.

We know tax and accounting issues are complicated.

Do you have additional questions on this topic for this author?

Related Posts

Latest Posts