How to Improve Cash Flow: 7 Tips That Work

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Originally Posted On: https://stockhouse.com/blogs/blogpost-(1)/november-2019/how-to-improve-cash-flow-7-tips-that-work

The struggle for how to improve cash flow is real! Just ask a company like streaming giant Netflix, which, for all its notoriety, has found itself downgraded as a result of negative cash flow.
You can have all the “business” you need to be a success, but if no one’s paying you on time, it can hurt. In the following article, we’re going to address what you can do to boost your situation so you’re always getting paid when you need it.
Let’s begin!

1. Stop Buying Things Outright

One way to improve cash flow is to stop paying cash for things. We know, we know. That usually means you end up paying more in interest than you would otherwise.
But let’s dig a little deeper. You don’t need to own every single thing you buy. Sometimes paying cash causes you to delay purchases that you need to make, and it creates an increased need for overhead (i.e., storage facilities, maintenance costs, etc.).
By leasing instead of buying, you can keep your reserve cash fund solid. You’ll also forgo additional unnecessary expenses, and you’ll have the help you need when you need it instead of having to wait for it.

2. Encourage Faster Payments

Improving cash flow also may mean adjusting how and when you accept payments and what you charge your customers or clients for products/services. For example, you could present an option where the client gets a considerable discount if they pay up-front.
Build this into your pricing, and you’ll benefit in a couple of ways. You’ll get guaranteed cash on-hand while moving more inventory.
Something else to consider is electronic payments. Most vendors are on-board, but there are a few holdouts. If you’re one of them, start accepting credit cards or eChecks or some other form of ePayment and enjoy faster payment!

3. Be Choosier on the Customers You Accept

Improved cash flow depends on who your customers are as well. If you have someone who’s always paying you late or missing payments altogether, it can be beneficial to remove that “promise” of a sale in favor of finding a new client/customer who’ll actually pay.

4. Strength in Numbers

Got a business? There’s a reasonable expectation you have inventory or some other form of expense that you may have to buy in bulk. While this is technically an expense issue and not cash flow, you can improve the latter by partnering with other companies to buy in bulk and enjoy deeper discounts.
This allows you to keep more cash on-hand for expenses that have to be addressed. So really, it’s one of the backdoor ways to improve cash flow that many businesses forget to take advantage of.

5. Revisit Operating Expenses

Latching onto the cooperative idea, another way of improving cash flows is to reexamine all your expenses. What can you live without or reduce consumption of that might have a beneficial effect on your bottom line? Remember, any cost you’re able to cut in the near term will pay long-term dividends on the balance sheet.

6. Liquidate Outdated Assets

Technology and equipment wear out eventually. The longer you’re in business, the more necessary liquidation becomes. By “liquidation,” we mean selling.
Figure out ways to auction or sell off assets that are past their useful life. When you do, redistribute that cash into your quarterly spending to handle any unforeseen expenses.
You might also consider an accounts receivable financing loan to help reduce your monthly expenses and manage expenses until payments are received.

7. Restructure How You Pay

Finally, you might consider an accounts receivable financing loan to help reduce your monthly expenses and manage debt until payments are received. Options like these enable you not to be at the mercy of delinquent payments, so they’re well worth considering.
Follow These Steps for How to Improve Cash Flow
We hope this look at how to improve cash flow has been an enlightening one. If you take nothing else from it, know this: you have options!
Start employing one or all of these options right away and you’ll be enjoying a more pressure-free environment in which you can do business. And for more business information and tips, check out some of our other blog posts.

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