10 ways to increase your business cash flow

Take time to check your pricing and processes to maximize their effectiveness

10 ways to increase your business cash flow

Cash flow is the net amount of cash, or its equivalent, which is transferred in or out of your company. If you’re running a company, the amount of value you create for your shareholders is directly linked to how well you can generate positive cash-flows after you’ve paid your expenses.

Here are 10 ways you can increase your business cash flow.

  1. Review your process: You need to know what every step of your process is, and keep track of how well it’s doing, to manage and improve it, and increase your cash flow. Consider whether you need a new accounting program to keep track of your accounts receivable and payable, so you know how much is coming in and needs to go out, and when. If you must update your process or systems, consider consolidating them to make your regular reviews easier.
  2. Become more efficient: Look at everything in your business from how you use utilities to how you schedule your workforce. What you need can change over time, and it’s worth checking out how you can do things smarter or cheaper. It may mean adopting new, or different technology, reorganizing your workflow, or looking for new alternatives for what you’ve always done.
  3. Reevaluate your operational expenses:  Check if you’re paying a lot for goods or services that you don’t need. Can you cut some lines from your monthly budget? Over time, small expenses can add up, so you should periodically review them to see how essential they are.
  4. Cut costs: If your cash flow is tight or you’re worried it might soon be, look at your payables to see what you can cut. Is your rent too high? Consider negotiating a reduction with your landlord, finding another location, or working remotely. Are you reading all the publications you have? Do you need to belong to all the organizations you do – or can you cut them and their dues? Check your insurance policies. Having already reevaluated your operational expenses, you should have some ideas of what you can revise. 
  5. Lease, don’t buy, new equipment: If you need new equipment, technology, or company vehicle, consider leasing, rather than buying, it. That way, you can get the most recent version without paying a lot of cash up-front and trade it up rather than replace it later.
  6. Check your inventories: Do you have extra inventory just sitting there? It can be expensive to store it, so you should consider having a clearance sale, using a liquidator, or even donating it to a charity for a tax receipt. Once you clear that space, you can review whether you still need it.
  7. Update your payment process: How old is your payment process? Can you update or streamline it? Consider switching to automated or digital payment systems, and developing automatic reminders and electronic payments to save you time and money. You may also be able to ask clients for initial deposits or divide payment for a large process into several stages, so you’re paid at the end of each step rather than the end.
  8. Negotiate with, or incentivize, customers: Are your steady customers paying you every 60 days? Can you incentivize them to pay within 30 days? That may mean offering a discount for early payments, but it may be worth it if you can get your money earlier. Are your clients paying you monthly? Maybe you can also offer an incentive to convince them to switch to an annual plan, so you get their money upfront rather than over time.
  9. Consolidate or renegotiate business debt: If you owe money, talk to your lenders and see if you can negotiate a lower rate or extended payment terms, which can help you boost your cash flow. Many institutions have created special programs during tis pandemic to help businesses, so you might be able to benefit from them.
  10. Check your pricing structure: If your business cash flow doesn’t depend on invoicing, then stagnant, or decreasing, revenue may be due to outdated pricing. Are your prices so high that you’re losing business to competitors? Or, have you been undercharging and need to increase your prices to avoid dipping into your margins? Take the time to review all the factors in your pricing structure and consider how they’ve changed over time before you overhaul them. You need to consider wages, equipment, fees, and competitor prices before you reset them, but do check on these regularly, too.