20+ Tips to Improve Cash Flow
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.
- Stop services for clients who haven’t or appear that they won’t pay.
- Require up-front deposits when making sales if possible.
- Follow up with delinquent customers frequently.
- Late payments should incur some kind of penalty.
- Allow for credit cards payments, when needed.
- Offer discounts that entice customers to pay in cash. This helps move your cash flow in the positive direction.
- Set the payment expectations of new customers with a welcome letter.
Suppliers/Expenses
- Avail yourself to any discounts offered for early payment.
- If there are no such discounts, make payments to suppliers when invoice is due.
- Find out from suppliers whether payment terms can be extended.
- Where possible, make payments by credit card.
- Ensure that credit card and loan payments are made on time to avoid interest and penalties.
- Look for possible deductions in current expenses.
- Change suppliers to reduce costs whenever possible and appropriate.
Other
- Sell excess inventory to generate cash.
- Identifying the 20% of your inventory that takes the longest to sell and discontinue it.
- Until your cash flow situation improves, delay or reduce salary to owners.
- Setup a line of credit with your bank. There are many institutions you can go to for loans with bad credit that have great interest rates and can give you an instant loan.
- Prepare a budget to determine your short and long term cash needs.
- Use short-term loans: Loans from various financial institutions are often called for to cover short-term cash flow problems. Revolving credit lines and equity loans are other possible options used in this situation.
- Automate repetitive tasks and use personel for innovation and adding value.
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