20+ Tips to Improve Cash Flow
Dealing with cash flow can be a problem for many startups, small businesses and personal finances. Cash flow problems come from many different sources and can have a significant impact on the health of a business or household finances. The following are 20+ tips to help improve cash flow (mostly for businesses) in the short term:
Receivables/Customers
- Invoice as early as possible.
- Suspend services for clients who haven’t or appear that they won’t pay.
- Request deposits at the start of contracts if possible.
- Follow up with delinquent customers often.
- Charge a fee for late payments.
- Allow for credit cards payments, when needed.
- Provide discounts to incentivize customers to pay in cash. This will help move your cash flow in the positive direction.
- Set the payment expectations of new customers with a welcome letter.
Suppliers/Expenses
- Make use of discounts offered for early payment.
- Unless discounts are offered, pay suppliers only when invoice is due.
- Find out from suppliers whether payment terms can be extended.
- Where possible, make payments by credit card.
- Avoid interest and penalties by making sure that credit card and loan payments are made on time.
- Reduce current expenses wherever possible and revisit regularly.
- Whenever possible, do some comparison shopping for new suppliers.
Other
- Sell excess inventory to generate cash.
- Stop carrying the portion of your inventory that takes the longest to sell.
- Until your cash flow situation improves, delay or reduce salary to owners.
- Start a line of credit with your bank. There are many institutions you can go to even for bad credit financing that have great interest rates and can give you an no credit check loan.
- Prepare a budget to determine your short and long term cash needs.
- Taking out short-term loans: Loans from various financial institutions are often necessary for covering short-term cash-flow problems. Revolving credit lines and equity loans are other types of credit used in this situation.
- Automate the mundane and use your human assets to innovate and add value.