8 Effective Methods to Improve Cash Flow Part 2

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It’s often said “cash is king,” and cash flow is the lifeblood that fuels the sales muscle of any business. If we know this to be true, why don’t we do more to control and create abundant cash flow?

The basic elements for creating abundant cash flow is controlling the stream of money that ebbs and flows through your business.

Improved and abundant cash flow creates more predictable business patterns, leading to effective planning and budgeting.

Predictable cash flow literally keeps the lights on and pays salaries and the mortgage. It’s heartbreaking to see companies with brilliant ideas, awesome products or services, who might even be highly profitable but have slow growth have to close shop due to poor cash flow.

Please keep in mind that profit is not the same as cash flow. I’ve seen lots of highly profitable businesses with negative cash flow

With that in mind, here are four additional ways to immediately improve your personal or business cash flow.

For the others, please get our new ebook, “48 Powerful Ways to Immediately Improve Your Personal and Business Cash Flow”:

Recurring Charges for Products

Review credit cards and bank accounts for recurring charges for products you no longer use or need.

Consider canceling magazine, newsletter and newspapers subscriptions if they’re causing more clutter than keeping you informed or boasting your knowledge base.

If you once ordered a monthly subscription box service for health supplements, wine clubs, shaving gear, cosmetics, ask yourself if you need them.

Collect Now on Recurring Orders

If you offer a service or product that’s delivered monthly, offer clients an annual price discount by giving them 12 months for the price of 10 when they pre-purchase now.

This immediately puts cash in the bank, but you must actively manage your cash, keeping in mind you’ll be delivering future products with today’s cash flow.

Related: 8 Most Effective Methods to Improve Cash Flow Part 1

Collect on Receivables

Go through your outstanding Accounts Receivables and call every customer and client whose invoice is past due to inquire when you can expect payment.

If a good client has legitimate financial problems, ask if they can pay at least small periodic payments towards the balance.

For select clients, you may consider offering a one-time balance reduction if they can close the balance quickly.

For accounting and tax purposes, you may find that a great time to do this is in December or at the end of your fiscal year.

Of course, you can seek help from a collection agency, but weigh their fees against the previously stated strategies before doing so.

Stretch Out Payables

Use the maximum time allowed (often 30, 60, or 90 days) to pay suppliers, before you incur late fees, penalties, or interest charges.

This interest-free time period is like your mini line of credit from a supplier.

During this time frame, you should be actively collecting receivables from your clients.

Note 1: The exception to this may be when suppliers offer Early Payment Incentives.

Note 2: Concur.com found that the average small business receives six duplicate invoices totaling more than $12,000 each month. If you’re not tracking payment of invoices closely, it’s easy to make duplicate payments—which can choke off cash flow. You’ll find that it takes much longer for you to have that duplicate payment reversed and get your money back than it did to write that initial duplicate check.

Enjoying this content? Click here to read the previous article in this series.

Now that you’ve seen eight of the 48 ways, can you share one tip from your own experience? Please comment below.