Maintaining a healthy cash flow is one of the most important things you can do as a business owner. However, we know it isn’t always that easy, so here are five tips to improve your cash flow. Through a combination of the careful management of your accounts and control of your payment terms, you can ensure that you never come up short. Here are 5 tips to improve cash flow.
1. Use a cash flow management tool
There is a digital tool for everything, so there is really never any need to struggle to control any administrative aspects of your business. You can easily track your inwards and outward cash flows using one of the many cash management tools available online. Float, Pulse, Cushion and UpYourCashFlow are some of the best ones. Look for the one that suits your budget.
2. Expand payment options to improve cash flow
Speeding up your payment options will make it easier for your clients to make payments in a time frame that suits you. Make as many options available as possible, placing the emphasis on convenience. Credit cards, debit cards and digital options such as Venmo, PayPal, Square or Apple Pay are all tools that you should add to your payment toolbox. Give your clients as many options as possible and as are convenient for you.
3. Match receivables to payables
One way to keep cash inflows and outflows more in line with another is to ensure that the payment terms you offer to your customers match up with those you receive from your suppliers. If you have 30 days to pay invoices from your suppliers but allow 60 days for your clients, you creating a cash-flow gap. Try to bring the two sets of payment terms in line with one another.
4. Don’t be too generous with your payment terms
On the same note as the previous point, another thing to remember is that, while you want to help your clients and accommodate their payment needs, you shouldn’t offer payment terms that are actually detrimental to you. By giving them 45 to 60 days to settle your invoices, you may be creating problems for yourself. Try and stick to 30 days as much as you possibly can. Offer extended payment terms only to really good clients who have earned the right.
5. Try invoice factoring to improve cash flow
When all else fails and you are unable to prevent a cash flow gap, invoice factoring is a quick and easy way to cover the shortfall. It is much faster than applying for a loan and enables you to get a cash injection without incurring debt.
Kore Capital is a business financing solutions provider. We can offer cash flow solutions such as invoice factoring to help you overcome those temporary shortfalls. Contact us to find out about our solutions and for more tips to improve your cash flow.