Tips on how to Improve your Cash Flow

Tips on how to Improve your Cash Flow

Can you believe that we more than halfway through the year already? Many of us are starting to take mini vacations or staycation and trying to keep our kids busy with many camps programs being closed this summer. It is not a typical vacation year. I know I will be staying local.
Have you ever wondered how you can improve your cash flow? Would you like to learn how you can speed up your cash flow? Below are some helpful tips that will help you with manage your cash flow more efficiently.
Check out the featured links below for new features and improvements that QuickBooks online has come out with, positive cash flow, and updates to the Paycheck Protection Program.
Do you need a cash flow chart put together? Give us a call and we can put one together for you.
Laurie O’Neil
Owner, Innovative Financial Services LLC

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5 Ways to Speed up your Cash Flow

One of the biggest challenges for small businesses is managing cash flow. There never seems to be enough cash to meet all of the obligations, so it makes sense to speed up cash flow when you can. Here are five tips you can use to get your cash faster or slow down the outflow.

Stay on top of Cash Account Balances

If you’re collecting money in more than one account, be sure to move your money on a regular basis when your balances get high. One example is your PayPal account. If money is coming in faster than you’re spending it, transfer the money to your main operating account so the money is not just sitting there.

Invoice Faster or More Frequently

The best way to smooth cash flow is to make sure outflows are in sync with inflows. If you make payroll weekly but only invoice monthly, your cash flow is likely to dip more often than it rises. When possible, invoice more frequently or stagger your invoice due dates to smooth your cash balances.
Take a look at how long it takes you to invoice for your work after it’s been completed. If it’s longer than a few weeks, consider changing your invoicing process by shortening the time it takes to send out invoices. That way, you’ll get paid sooner.

Collect Faster

Got clients who drag their heels when it comes to paying you? Try to get a credit card on file or an ACH authorization so you’re in control of their payment.
Put a process in place the day the invoice becomes late. Perhaps the client has a question or misplaced the bill. Be aggressive about following up when the bill is 45, 60, and 90 days past due. Turn it over to collections quickly; the older the bill is, the less likely it is to get paid.

Pay off Debt

As your cash flow gets healthier, make a plan to pay off any business loans or credit cards that you have. The sooner you can do this, the less interest expense you’ll incur and the more profit you’ll have.
Interest expense can really add up. If you have loans at higher interest rates, you might try to get them refinanced at a lower rate, so you won’t have to pay as much interest expense.

Reduce Spending

You don’t always have to give up things to reduce spending. Look at your expenses from last year and ask yourself:
What did you spend that was a really great investment for your business?
  • What did you spend that was a colossal mistake?
  • What do you take for granted that you can cut?
  • Where could you re-negotiate contracts to save a little?
  • Where could you tighten up if you need to?
Managing cash flow is always a challenge, and these tips will help give you a little cushion to make it easier.
By |2020-07-10T14:52:18+00:00July 9th, 2020|Categories: Uncategorized|Comments Off on Tips on how to Improve your Cash Flow