The Best Tips for Improving Cash Flow

Cash flow isn’t magic, but sometimes it can seem that way to businesses. It’s not easy balancing your company’s income and outgoing expenses, especially when you need to juggle several costs during the month. Fortunately, there are practical things you can do to make it easier. Follow these helpful tips for greater success.

Analyze Your Current Accounts Receivable Methods

When your car is making a strange noise, the first thing you probably do is check for warning lights on the dashboard. If you can’t find the issue there, you visit a mechanic for assistance.

In the same way, if you’re having trouble with cash flow, you should check the primary source of your income first: accounts receivables. Often, the underlying cause of poor cash flow is connected in some way to how you’re billing customers.

Are you making invoices right away after performing work? Some business owners forget, which can add several weeks to the time you wait for payment. Another common problem is giving clients too long to pay. Generally, you should try to have customers pay in 30 days or 45 maximum.

Offer More Options for Payment

Some businesses can benefit from accepting alternative methods of payment, such as digital payments, mobile payments, or debit cards. If you’re not accepting credit cards yet, now is the time to get started. Virtually all businesses prefer paying debts by credit card, and many consumers choose this method as well.

The purpose of expanding payment options is to make it easier for you to get paid on time. The more funds you have on hand, the better your cash flow and your ability to pay suppliers smoothly.

Negotiate Accounts Payable Terms

Some industries commonly have to provide payment terms of 60 to 90 days for clients. For example, healthcare businesses dealing with insurance companies have little choice but to accept 90-day payment windows. If that’s the case for your industry, you don’t have to take this unbalanced situation lying down. You may be able to balance out the scales by contacting your suppliers and requesting a larger window for payment. Just by shifting your company’s obligations from 30 to 60 days, you can improve your cash flow significantly.

Control Your Business’s Use of Credit Cards

Business lines of credit and credit cards can help with cash flow by giving you capital when you need it. That said, use the funds in a measured way. By paying back the balance quickly, you may even avoid interest.