Managing cash flow can be a challenge for many startups, small businesses and personally. Cash flow problems have many different causes and can have a significant impact on the health of a business or personal finances. The following are 20+ tips to help improve cash flow (mostly for businesses):
Receivables/Customers
- Send invoice as quickly as posssible.
- Cut off customers who haven’t or appear that they won’t pay.
- Require up-front deposits when making sales if possible.
- Follow up with delinquent customers often.
- Charge a fee for late payments.
- Accept credit cards for payment, when necessary.
- Offer discounts that entice customers to pay in cash. This helps move your cash flow in the positive direction.
- Set payment expectations of new customers in your proposal, contract, or welcome letter/call.
Suppliers/Expenses
- Avail yourself to any discounts offered for early payment.
- Unless discounts are offered, pay suppliers only when invoice is due.
- Inquire as to whether suppliers offer extensions on payment terms.
- Make payments by credit card where possible.
- Be sure that credit card and loan payments are made in a timely fashion to avoid interest and penalties.
- Reduce current expenses wherever possible and revisit regularly.
- Whenever possible, do some comparison shopping for new suppliers.
Other
- Sell excess inventory to generate cash.
- Stop carrying the portion of your inventory that takes the longest to sell.
- Reduce or suspend salary for owners until cash flow problems are resolved.
- Start a line of credit with your bank. There are many institutions you can go to even for bad credit financing that have great interest rates and can give you an no credit check loan.
- Prepare a budget to determine your short and long term cash needs.
- Take out short-term loans: To cover short-term cash-flow problems, loans from various financial institutions are often needed. Revolving credit lines and equity loans are types of credit used in this situation.
- Automate repetitive tasks and use personel for innovation and adding value.