Growing Your Business

How to Improve Your Cash Flow in Eight Easy Steps  

How to Improve Your Cash Flow in Eight Easy Steps  

When you were a kid, you dreamed about becoming an entrepreneur. A year ago, you turned your dream into a reality. Now, you’re dealing with a common challenge business owners face, cash flow. If you can relate to this scenario, consider boosting your cash flow by adhering to the following eight steps.

Shorten Payment Terms

If improving your cash flow is a priority, avoid offering customers extended amounts of time to pay for products or services. Do you give your clients 60, or even 90, days to pay for their purchases? Think about shortening payment terms to 30 days. You may also wish to offer a discount to customers who pay for goods early. Charging a penalty to clients who miss payment deadlines is another option.

Invoice Customers Immediately

To speed up the collection of cash, invoice customers immediately after the delivery of products or services. Ensure you have the administrative capabilities in place to make this happen.

Take a Deposit Before Beginning Any Work

Do you complete time consuming projects for clients? Take a deposit before beginning any work. In doing so, you won’t have to fund the project. Your customers will.

Send Invoices Via Email

To ensure customers receive invoices immediately, utilize email whenever possible instead of snail mail. Providing customers with multiple payment options can also boost your cash flow. Accepting ACH payments is an especially efficient way to speed up your receipt of cash.

Use Business Credit Card to Extend Terms

Do you always pay your suppliers with cash? Utilize your business credit card instead. Become knowledgeable about your credit card’s grace period. For instance, you may have up to 21 days to pay for credit card purchases after you receive your statement. Take advantage of this opportunity to hold onto your cash for as long as possible. However, always pay your credit card balances on time. Securing a card with cash back features might be an option.

Replace Old Equipment

Do you own old, inefficient equipment that is mostly just taking up space? Using old equipment might be placing you at a competitive disadvantage. This is especially the case with outdated modes of technology. Consider selling old equipment for cash. Rather than buying new assets, you might want to lease them. Leasing can be a cost effective way to continuously provide you with the latest trends in technology.

Renegotiate Contracts With Service Providers and Suppliers

To boost your cash flow, talk with service providers and suppliers you currently have contracts with. See if they will extend the terms of your contracts for a discount. When discussing your existing contracts, you might also discover extras or add-ons you no longer need.

Work With an Accountant

If you don’t feel like you’re equipped to analyze and improve your cash flow situation on your own, work with an accountant. An accountant can analyze the difference between your cash flow projections and actual results. This professional can also help you foresee and plan for future cash flow difficulties.

For some people, starting a business is one of the most exciting, rewarding events of their lives. Unfortunately, too many companies fail after only five or fewer years of existence. To increase your odds of lasting business success, improving your cash flow is crucial. To boost your company’s cash flow, consider following the aforementioned simple steps.

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Julie Farless

Julie Farless

Martinez & Shanken, PLLC is a Certified Public Accountant (CPA) firm based in Gilbert, Arizona. We provide a full range of accounting, bookkeeping, consulting, outsourcing and business services, but we specialize in tax preparation. We work with you to ensure that your personal or business processes are conducted in a manner that ensures ongoing integrity in your financial transactions. We are available to answer your questions and help with your ongoing tax planning and changing business needs.

Deborah Martinez & Earl Shanken
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Arizona

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