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.
- Stop services for clients who haven’t or appear that they won’t pay.
- Require up-front partial payment when starting a new contract.
- Regularly follow up with delinquent customers.
- Late payments should incur some kind of penalty.
- 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
- Avail yourself to any discounts offered for early payment.
- If there are no such discounts, make payments to suppliers when invoice is due.
- Ask suppliers if payment terms can be extended.
- Make payments by credit card where possible.
- Ensure that credit card and loan payments are made on time to avoid interest and penalties.
- Reduce current expenses wherever possible and revisit regularly.
- Compare prices and switch to cheaper suppliers where possible.
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 if you have poor 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.
- Take out short-term loans: To cover short-term cash-flow problems, loans from various financial institutions are often needed. Revolving credit lines and equity loans are types of credit used in this situation.
- Use automation wherever possible and use your human assets to add value and innovate.
Comments are closed.