How to Improve Cash Flow in Your Business

How to Improve Cash Flow in Your Business
Ronis Gracie
on February 26, 2016
Read in 2 min

At some point or another, every business owner needs to work on improving cash flow. The reason is simple: without proper management of cash, business operations can’t continue without problems.

Here we’ll share tips for improving cash flow that every professional business owner must know:

Pro Tip: Get cash from customers as soon as it’s viable.

First of all, prepare correct invoices – making mistakes will only delay payment as customers are likely to question them. Also, send your invoices on time because the longer you wait, the later your payment will arrive. Keep in mind, if you just can’t wait for customers to pay, you can always take out an invoice financing loan against the value of your outstanding invoices.

In addition, you may consider asking customers for a deposit up front, rather than relying on 100% payment later. This may be more appropriate for some types of businesses than others, but this is normal for a large order of any kind. And, be especially wary of new customers placing large orders, especially if you can’t verify their past payment histories and/or business reputations.

Pro Tip: Improve cash flow by paying bills as late as possible.

There’s no reason to pay the next day if you can wait a month. Of course, this is only true if there are no penalties for paying later or when you don’t get extra discounts for paying early. One way to optimize your cash flow is to pay bills on the day they’re due. Another business-savvy move is to use a business credit card where the payment is charged several days later.

Pro Tip: Avoid unnecessary fees and charges.

On the contrary, if paying late incurs charges (or forfeits discounts) then it would behoove you to pay on time. Further, credit card rates are notoriously high, so make paying off thee balances your highest priority. Take advantage of the grace period while you can, but you’ll save money by paying your balances off early.

Consider if long-term financing makes more sense for your business needs; it’s often far cheaper than revolving credit in the long run. Plus, when it comes to business telephone, internet, and other utility services you owe it to your business to shop around for the best plan. Even small savings add over time, ensuring a strong cash flow for years to come.

Pro Tip: Optimize purchases and sales = Optimize cash flow

If you have to buy something, why not buy it at a discount? One of the ways to do this is to evaluate discounts for making bulk purchases or advance payments. What’s more, there are even buying cooperatives where similar businesses get together to make large volume purchases in order to get substantial discounts.

Furthermore, don’t be afraid to let go of your old inventory at discount prices. This way you’ll get more cash for operations and investment.

Generating healthy cash flow should be applied to all areas of business. For example, you may give up a bank account not bearing interest or let go of customers who cause more trouble than they’re worth. Being a savvy business owner means involves making the tough decisions to improve cash flow and drive incremental growth.

See Loan Options
Ronis Gracie Finance Journalist

A serial entrepreneur experienced with building several small companies from the ground up and consulting for many others, Ronis understands the finer points of small business financing. He’s passionate about small business & is committed to simplifying small business lending for others.


2018 Tax Audit Triggers Business Owners Need to Know

by Amy Fontinelle on January 12, 2018
While the overall risk of an individual tax audit is low, the odds go up when you file a business… Read more

How Your Tax Strategies Can Affect Getting a Business Loan

by Caitlyn Rose on January 3, 2018
Traditional banks are increasingly wary of lending to small businesses because it's simply not profitable enough. Instead, they go after the… Read more

Low-Interest Loans & Where To Find Them

by Dustin Clendenen on December 15, 2017
Sometimes we fall behind on our credit card payments, and those high APRs can start to take a real toll… Read more

How to Get a Loan In 2018 (The Easy Way)

by Rebecca Hosley on December 6, 2017
Applying for a loan can be confusing if you've never done it before, or if it's been a while (technology… Read more

9 Techniques for Managing Seasonal Sales Fluctuations

by Jackie Lam on September 8, 2017
If you’re a small business owner whose cash flow is affected by seasonal sales — we’re talking seasonal companies like… Read more

Amazon Lending – A Comprehensive Resource on Business Loans from Amazon

by Caitlyn Rose on August 14, 2017
The Amazon Marketplace has quickly become a go-to channel for both large and small businesses looking to develop an online… Read more

7 Basic Business Loan Requirements – Know What Lenders Are Looking For

by Rissa Ann on August 5, 2017
There are more ways than ever to fund a business launch, expansion, or unanticipated expense, but business loan requirements can… Read more

The 5 C’s of Credit Deciding Your Business Fate

by Amy Fontinelle on May 8, 2017
When it comes to small business loans, success is spelled with the 5 c's of credit. We know, applying for… Read more

How to Sell to Millennials in 2018 – What is a Millennial Person Thinking?

by Brenna Lemieux on May 5, 2017
With Gen Y collapsing under it's own debt, learning how to sell to millennials may not be your highest priority for… Read more

5 Types of Grants For Women-Owned Businesses

by Caitlyn Rose on December 29, 2015
If you are a woman thinking about starting a small business, you are part of a growing trend. Since 1997,… Read more
Join For Free & Start Browsing Loans