As all businessmen know, it’s not easy to maintain positive cash flow in a business, especially when you have slow-paying customers that tie up your assets in Receivables. In the meantime, all your expenses and other bills will be due, and you don’t have that same kind of flexibility about paying anytime within 90 days – your bills are due at the end of the month all the time. In order to avoid getting into cash flow problems, there are some strategies you can use that will make more money available to you, and help you to avoid late payments or possibly borrowing more money.
Cash Flow Strategies
Here are some of the most useful and effective strategies for maintaining positive cash flow:
- early payment discounts – encourage your customers to pay early by offering them discounts on products they buy from you
- form a buying co-op – collaborate with other businesses in your area to purchase from vendors in high volume, so you can earn discounts on the materials purchased
- streamline your inventory – rather than hold tons of inventory that isn’t moving, sell off goods and convert them into cash
- invoice immediately – by sending out invoices immediately after purchase, you should be able to shorten the window where a customer pays you
- lease rather than buy – leasing allows you to pay back a purchase price in smaller increments
- do customer credit checks – you can save yourself a lot of money and time by conducting credit checks on customers who don’t pay cash
- use electronic payments – by paying electronically, you won’t have to pay a bill until the morning it’s due, and that keeps money in your hands longer
- use high-interest savings accounts – you can earn far more money when you use these types of accounts, in some cases 15 times more than the national average on savings accounts.
Most businessmen are aware that cash flow is literally the lifeblood of a small business, and if you don’t have good cash flow, your business is probably struggling. If your business is having trouble with cash flow, we may be able to provide some financial assistance. Contact us at Porter Capital Group and we’ll be glad to discuss some options you may be eligible for in the way of needed cash flow financing.