Strategies for Improving Cash Flow

Managing cash flow is the number-one challenge for small businesses. Why? Too many owners are unrealistic about predicting their income and expenses. Or they may not see a cash shortage coming — and run out of money. To avoid these issues, it’s imperative that you understand the basics of cash flow, and learn to manage and improve it. Following are a few useful strategies:

Track your transactions

Taking control of your business cash flow can be as simple as using a spreadsheet tool to track how much money is coming in vs. how much money is going out. By precisely charting your business transactions, you can start to project your cash flow for the next six months or so. This snapshot will give you a better handle on how to meet your operating needs while still having the funds to invest in growth opportunities.

Use the calendar to your advantage

When expecting payment, remember that people don't always pay on time. To alleviate some of the headache of waiting for payments, make sure to schedule payment due dates several weeks before you’ll actually need the funds. You can also offer a discount for paying early.

Make your money work harder

Collecting money from customers is critical to feeding your business cash flow. One way to simplify the process is to offer a variety of ways to pay. With solutions such as automatic invoicing and online payments, there are more ways than ever to bill and track the money you are owed.

It's also a good idea to improve your own bill-paying habits as a business. Services such as online bill pay and specialty credit cards can provide intelligent structure and tangible business benefits that add more business value to your everyday processes.

Once you develop a cash surplus, it’s imperative that you invest it to provide a strong foundation for future growth. Make your money work harder for your business, by investing in solid money market accounts, sweep accounts1 or CDs.