12 Ways to Improve Cash Flow in Your Business

Cash flow is the lifeblood of a business

Here are 12 ways to improve cash flow in your business today:

— Ali (@AliTheCFO) April 18, 2023

1/ Ask for a Deposit

This brings cash flow into your business immediately which you can use to pay for expenses to service your clients

— Ali (@AliTheCFO) April 18, 2023

2/ Bill Frequently

Don’t wait to bill until the end of a project. Use time-based billing (i.e. bill every month) instead of milestone billing (i.e. billing when the work is complete)

— Ali (@AliTheCFO) April 18, 2023

3/ Beginning of Month Billing

If you provide a regular recurring service, move your billing date to the start of the month to get cash before you need to pay expenses for the month

— Ali (@AliTheCFO) April 18, 2023

4/ Make payments seamless

Don’t make it hard for clients to pay you. Use digital payment methods. The more friction clients have to make payments, the later you get your money

— Ali (@AliTheCFO) April 18, 2023

5/ Offer an early payment discount

Everyone loves a discount. Incentivize early payment with a discount

— Ali (@AliTheCFO) April 18, 2023

6/ Stay on top of accounts receivable

Make it a priority to follow up on outstanding bills greater than 30+ days.

— Ali (@AliTheCFO) April 18, 2023

7/ Lease vs. Buy

The cash flow required to buy equipment upfront can be substantial. Leasing allows you to get use of that equipment for a smaller cash outlay immediately

— Ali (@AliTheCFO) April 18, 2023

8/ Supplier terms

If you’re paying suppliers before you get cash from your customers, consider negotiating bill payment deadlines with your suppliers for later dates so that you’re paying bills once you have cash in the bank

— Ali (@AliTheCFO) April 18, 2023

9/ Increase your prices

Even if your bill timing is perfect, if your prices are too low, your business simply can’t survive with low margins. Increase your prices so that you have healthy margins and cash flow

— Ali (@AliTheCFO) April 18, 2023

10/ Watch your inventory

Review all the items in your inventory. If you have slow-moving items, consider buying less of those so that you’re not trying up cash in inventory

— Ali (@AliTheCFO) April 18, 2023

11/ Factoring

If you can’t collect cash from your customers quickly, you can look into invoice factoring. This means selling your unpaid invoices to a finance company for a fee so that you can get cash sooner in the bank

— Ali (@AliTheCFO) April 18, 2023

12 / Use a credit line

If your business has a mismatch between when cash comes in the door and cash goes out, consider using a credit line to pay for cash outflows while you wait for the cash to come in

— Ali (@AliTheCFO) April 18, 2023

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— Ali (@AliTheCFO) April 18, 2023