Financing Working Capital

25 Ways to Increase Cash Flow Management

Gradually managing cash flow makes it possible for a company to have the right amount of cash at any particular time. Having too much cash on hand means capital is sitting idle. But a lack of available money can trip up an otherwise expanding business. Within this article we’ve put together the top tips business pros had to offer to help you improve your business’s cash flow management.


Barbara Corcoran -- cash flow management

1. Only Borrow If There’s Long-Term Benefits

Barbara Corcoran, Entrepreneur & Shark Tank Judge

Borrowing money may be a sound business decision when done strategically and with discipline. But borrowing money without even thinking through the consequences can lead to business catastrophe. Consider exactly how you anticipate your company to benefit from the borrowed cash over the long-term and how likely you are to really get the anticipated benefits. See more small business information from Barbara Corcoran here.


Ty Kiisel cash flow management

2. Plan How to Use the Capital Before Borrowing

Ty Kiisel, Editor at OnDeck Capital

Capital may be leveraged to help a business grow or flourish, but it won’t block you from crashing. You can use a short term business loan or business line of credit to bridge short term cash flow problems, but it might cripple your business with much more debt if you don’t possess a definite ROI or improvement program. Ensure that you plan out how the capital will aid your business before you take on the extra capital.


Jeff White cash flow management

3. Turn Unpaid Invoices to Cash

Jeff White, Finance Analyst at Fit Small Business

It is possible to get money immediately for all outstanding invoices due from the next 90 days to fill a cash flow gap while you wait on your client to pay. This can be named Invoice Financing, or AR Lending, and you’re able to find a line of credit for the value of your invoices from a company like Fundbox. You can learn more by checking out our guide to invoice financing.


Christal Bemont cash flow management

4. Track Everything & Maintain Your Information Accessible

Christal Bemont, SVP at Concur

Concur recently discovered that small businesses receive a mean of six replicate invoices totaling more than $12,000 monthly. If you’re not monitoring these carefully, it would be easy to make duplicate payments. Tracking it all will help you head off errors and oversights, and maintaining all that data in one location will help your entire staff be on the same page.


american express open forum cash flow management

5. Get Paid Faster with Mobile Payment Solutions

About the American Express OpenForum, you can learn about 12 extra cash flow hints. One of those tips is to provide mobile payment solutions to your clients. This is particularly good if you sell products or offers services in your client’s’ home or office. You can forget about bills and instead get paid right on the spot with mobile apps that can use a telephone or tablet computer to swipe debit and credit cards.


Caron Beasley cash flow management

6. Have a Business Line of Credit on Hand

Caron Beasley, Contributor at the Small Business Administration

Using a business line of credit will provide you a cushion of available funds to use when it is necessary. The best part is you don’t have to pay for any portion you’re not borrowing. You need to apply for a LOC before you believe that might need it, because it can work as an emergency credit line to use as you please.


Michael Burdick cash flow management

7. Don’t Mistake Gain for Money Flow

Michael Burdick, CEO of Paro

High profits for a specific month do not automatically mean that you have the money in hand to pay your expenses when they are expected. Make sure you set clear, efficient, and quick processes to collect customer payments, and take advantage of any flexibility your suppliers or lenders provide you with. Maximize the utilization of your profits to get the money when you need it.


8. Implement a Cash Flow BudgetIowa State University cash flow management

William Edwards, Iowa State University

A cash flow budget is an estimate of all cash receipts and all cash expenditures that are predicted to occur during a set time period. A cash flow budget forces you to think through your plans for the calendar year, and it forces you to check those plans to see whether they have a high probability of succeeding. If not, you may change your strategy before it fails.


bluevine cash flow management

9. Build a Cash Reserve

It’s possible to use a cash book or business line of credit for you through the hard times of common cash flow gaps. You can use the money to pay off instant debts which pile up from completing the work you are awaiting payment for, or even to take on additional work without waiting for repayment of previously completed jobs.


Carson Yarbrough cash flow management

10. Credit Cards Can Simplify Expense Tracking

Carson Yarbrough, Consumer Insights Specialist in Offers.com

Company credit cards can be a fantastic help for people who are about to begin a new company since they may be used to track expenses daily one, and supply a lot of chances, bonuses and cash back benefits for your business. Not only conduct business credit cards give you net-30 terms, but they could also plugin to your accounting applications and also can keep your expenses into one account. This can streamline your accounts payable procedure.


11. Be Active in Forecasting Your Outcomes

Finance professionals utilize calling to help them properly manage the cash of a organization. You can identify financial trends utilizing digital tools, and you could have a very clear picture about where your company stands at the industry. All this can result in better decisionmaking, which could impact your money flow in a favorable way.


Troy Hazard cash flow management

12. Share Your Money Flow Plan With Your Team

Troy Hazard, Creator of 12 Firms, President of the Entrepreneurs’ Organization, and Writer of Future-Proofing Your Small Business

Manage your cash flow by getting into a fiscal rhythm on your company with weekly/monthly/quarterly cash flow preparation. Monthly performance indicators and annual preparation events can make everyone on the staff more aware of the money going out the door, and restrict unnecessary expenditures. Do not keep your staff in the dark, or your risk mismanaging the cash you do have.


inc cash flow management

13. Offer a Discount for Fast Payment

1 option to raising cash flow would be to provide your customers discounts if they pay early. While this practice may impact your profit margin, it might help your management of cash flow by incentivizing clients to make payments sooner than charging cycles normally require. Your company may also make the most of this with suppliers and others that you owe.


matt baker cash flow management

14. Consider Accepting Electronic Payments

Matt Baker, VP of Strategy at FreshBooks

Consider accepting electronic payments. Does this make you look more professional to your clients, but FreshBooks data shows digital payments are made 8 times faster than traditional methods. That’s a huge deal when you don’t now receive normal payments from your customers.


Neil Mclaren cash flow management

15. Use Technology to Create a Lean Business

Neil Mclaren, Founder of Vaping.com

Technology makes it possible for businesses to operate’lean’ and to keep their expenses as low as possible. Assess each operational procedure within your business and determine precisely how much it costs your business each month. Look for technological solutions that permit you to execute these tasks more economical, and implement them as quickly as possible!


kabbage cash flow management

16. Diversify Your Product Offerings

Kabbage.com

You can diversify what products you offer to boost your sales and assist with cash flow. Should you tie these new offerings to your other products then you might get additional cash with current customers, and attract new clients that may become interested in your main product as well. This is a long term solution, and won’t assist with a direct cash flow gap.


michael lewis cash flow management

17. Require Deposits on Big Orders

Michael Lewis, Writer in Money Crashers

If you’re working on a large, or habit, purchase then require a deposit (or deposit) of 50%+ up front. This will prevent you from spending a great deal of cash to satisfy the order and not being able to be paid in your work for up to 90 days. With no deposit, you risk your customer negotiating a reduced payment once you deliver.


Richard Gertler cash flow management

18. Handle Payment Expectations With Clients

Richard Gertler, Business Attorney

Invite clients that you expect to be compensated on a timely basis sets the stage for them to pay punctually. Phone call reminders in addition to written reminders reinforces that message. Using a credit card authorization on file that allows for charging of the customer’s or client’s credit card on past due bills helps eliminate the effort and time of collection.


Marty Spargo cash flow management

19. Outsource Cost Effective Work Spots

Marty Spargo, Co-Founder of REIZE

Outsource as far as possible to areas that can do the work more cost effectively. When outsourcing work, make certain there is somebody in charge of the person or team that you’re outsourcing to that will take ownership of the quality of the output. And be sure person understands how to be frugal.


Ryan Himmel cash flow management

20. Negotiate Different Payment trademarks

Ryan Himmel, Financial Partnerships Lead, Americas at Xero

If your cash flow is causing difficulties at particular times of the year or year, then you may be able to improve the problem without dramatic changes. Consider negotiating different payment dates to your providers to better align inflows with outflows. This could spread out your cash flow and provide you the breathing room you need.


Catherine Wood cash flow management

21. Define All Cash Outflows

Catherine Wood, Creator of Unbounded Potential

Begin by understanding where each single parcel of income is coming from every month, how much it is, and once you’re able to expect it. Then write down an exact definition of what each cash outflow is (for example, what precise expenses are categorized as”training”).When you determine how you are able to make the money work, you become prone to start taking action and removing non-essentials.


Rebecca Kennedy cash flow management

22. Know Your Burn Rate

Rebecca Kennedy, Contributor in MP Star Financial

Understand your burn speed, which can be your negative money flow. Money flow tells you how long a company could stay in business without earnings or additional funds. To calculate, you have to incorporate all of your monthly operating costs. This way you’ll understand how much the company is spending on a monthly basis, and whatever’s not vital can be cut. It is possible to handle each of these amounts through an accounting program, like Quickbooks.


Bob Shoyhet cash flow management

23. Require Payment First, or Invoice Faster

Bob Shoyhet, Chief Financial Officer

If you end up struggling with cash flow then you might want to employ a payment first policy that makes your customers pay before you supply solutions. If you’re not eager to have such a rigorous policy, then try invoicing your clients quicker. The faster you can get them a statement, the quicker they have the potential to pay it.


Americas SBDC cash flow management24. Repair Negative Money Flow Trends

Find what adverse cash flow tendencies you’ve got, like buying more stock than you can sell or extending credit to clients that habitually pay late. Once you know what those tendencies are within your business then you are able to eliminate them and enhance your overall cash flow.

Steven Muntean cash flow management

25. Have a Weekly Cash Flow Report

Steven Muntean, CEO of S3 Safety

The best cash flow management tool that my businesses utilize is a simple yet quite effective Microsoft Excel formatted Weekly Cash Flow Report. The Weekly Cash Flow Report focuses on three main Key Performance Indicators (KPI’s). The first is your actual beginning of period cash equilibrium, the next is your projected Accounts Receivable (AR), and third is Accounts Payable (AP) to help predict expenses.


BONUS: Add Discipline for Your Invoicing and Payment Systems

Ian Fitz-Harris, Strategic Development Director in URICA

Chasing outstanding bills burns time. If you don’t have the procedures in place to make certain your customers pay in time, and also the discipline to apply these procedures, your money flow might just dry up. Send your invoices quickly. Place reminder systems in place so that you chase outstanding invoices the minute they are overdue. Be thorough — it’ll save time. You might also consider adapting your conditions so that your customers incur a monetary penalty for late payment. Alternatively, offer a discount if they pay premature.


quickbooks cash flow management

BONUS: Extend Your Payables

Quickbooks.Intuit.com

You may typically extend a lot of your payables. You might acquire net-30 or even net-60 terms from your suppliers, in the event that you just ask. If you currently have terms, then try to extend terms as high as net-90. This may improve your immediate cash flow by stretching when you truly need to make many of your bigger payments.


Over to You

Now that we’ve shared what many industry experts have to say about improving your company’s cash flow, we would love to hear what you think. Do you have resources or tips which may benefit other small business owners? If you need any clarification or have questions about cash flow management feel free to leave those from the comments below.

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