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.
- Cut off customers who haven’t or appear that they won’t pay.
- Require up-front deposits when making sales if possible.
- Follow up with delinquent customers often.
- Charge a fee for late payments.
- Accept credit cards for payment, when necessary.
- 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.
- If there are no such discounts, make payments to suppliers when invoice is due.
- Find out from suppliers whether payment terms can be extended.
- Make payments by credit card where possible.
- Avoid interest and penalties by making sure that credit card and loan payments are made on time.
- Review current expenses to see what can be reduced.
- 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.
- Setup a line of credit with your bank. There are many institutions you can go to for a loan with bad credit that have great interest rates and can give you an instant loan.
- Plan a budget to establish your long and short term cash flow 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 repetitive tasks and use personel for innovation and adding value.
