Many small business owners mistake abundant sales for healthy cash flow and as a result imperil the long-term stability and growth of their companies. Continuous and careful management of cash flow is crucial for all businesses, especially those that experience seasonal fluctuations in demand. Here are some tips to help you boost your company’s cash flow.
Have a Cushion
Most companies experience lean times now and then. Prepare for these setbacks by working with a financial institution to set up a line of credit when sales are strong. Additionally, build up a cash reserve that you can draw on in times of need. If your company needs a quick cash infusion, consider alternative means of funding such as equity financing, accounts receivable financing, and peer-to-peer lending networks.
See the Big Picture
If you only deal with what’s happening in the present time, you’re going to be continually putting out fires. Instead, forecast your anticipated cash flow for the coming week, month, and year. This allows you to foresee possible problems and create a budget to compensate. Once your budget is in place, continue to analyze your company’s cash flow situation to be sure you’re staying on track to prosperity.
Income is imperative to healthy cash flow. Streamline your invoicing and collection systems to encourage your clients to pay promptly. To facilitate their payments, offer several options such as credit cards, PayPal, and direct deposit. If your business is seasonal, consider diversifying your products or services to make up for the gaps in your income during off seasons.
Instead of purchasing the expensive equipment you need to run your business, consider freeing up some much-needed cash by leasing. Additionally, negotiate with your suppliers for discounts or more favorable terms. Delay payments to vendors and creditors so that the funds keep working for you for as long as possible.
If the financial aspects of the business overwhelm you, hire an accountant to help you out. Even if you feel you can handle it yourself, be sure to take advantage of cutting-edge accounting software programs.
For more advice on rejuvenating company cash flow, contact Span Capital.