Small Business Corner – Managing Your Cash Flow

One of the top reasons a small business struggles or goes out of business is poor cash flow. Here are a number of things that you can do to end your cash flow issues once and for all!

1. Ask yourself what it is costing your business

Determine how your cash flow issues are effecting your business. Often times, this is a huge problem that is ignored by a small business owner. Borrowing money and factoring are band aids, not solutions, to this issue.

2. Consider eliminating your payment terms

If you are currently giving your customers 15 or 30 days to pay, consider implementing a new policy of payment when services are rendered. This will improve your cash flow, as well as the costs associated with customers that are late pay or no pay.

3. Stop tolerating slow paying customers

Do you seem to attract slow paying customers? If you do, you need to determine why you are tolerating this. Often times, there is a fear around asking customers to pay on time. By upgrading your standards, instituting new policies, and enforcing consequences for late payment, you can make large improvements to your cash flow issues. Determine your action plan for collecting on overdue invoices, and execute it today!

4. Communicate your payment terms up front to your customers

Make sure that your policies are clear up front with your customers, including the penalty for late payment. This should help alleviate future problems.

5. Provide an incentive to pay early

Providing incentive for customers to pay up front or early is a great way to improve your cash flow. The extra money it costs you to do this will more than offset any costs associated with trying to collect on past due invoices.

These are just a couple of ways that you can improve your companies cash flow situation. Implement these ideas, and watch your business improve!