One of the biggest challenges facing small business today is cash flow…or lack of it.
There are many ways to improve your cash flow, one is to create systems that close your cash gap…from the time you take an order, purchase materials, make your product, ship your product and collect on an invoice.
Obtaining either a small business loan or line of credit would help. Apply for this when you don’t need it…
Make sure you invoice as soon as you have completed the service you provided. Waiting until the end of the week could push your accounts receivable out 5-7 days. Sending your invoices by post pushes your accounts receivable out by 5-10 days. If you have 30 day terms, you will be waiting 40 days or longer to be paid.
Perhaps offer incentives to your customers to pay early. An example is the gas company that offers a discount if paid by a specific early date.
On the cash outflow side, call your vendors and negotiate partial payments or better terms. Communication sets them at ease. If you do set up terms, make sure you do what you say you will do.
Cash flow budgeting helps you nip the issue in the bud from the get go! This is one of the first things we work on with our business owners.