6 Ways to Improve Cash Flow for Your Business

More businesses fail for lack of funding, or positive cash flow, than anything else.

According to a U.S. Bank study, 82% of businesses fail due to poor cash management.

When planned carefully, you can keep your business afloat during times where expenses exceed income, but it's important to know where cash flow is going to and from during those times.

You can also be showing profits, but have a dwindling cash supply due to things like customers not paying invoices, estimated tax payments, debt service and more.

There are so many moving pieces to account for when starting and managing a business, it really helps to have a pro that can help you make sense of it all.

Here are a few reasons why cash flow planning is so important:
💰 Cash is critical to survival
💸 Clarity around where money comes from & where it goes to
💰 Highlights problems
💸 Eliminates uncertainty
💰 Helps plan for investments
💸 Helps you set goals
💰 Helps you understand why net income & your checking account balance aren't the same

Things you can do now to enhance cash flow:
1️⃣ Know your cash flow. If you're not actively reviewing this important financial statement, get on it ASAP. Understanding your businesses' statement of cash flows will give you a lot of insight into where the cash for your business is coming from and where it's going to.
2️⃣ Analyzing amounts due from clients and customers. Do you offer charge accounts? Are there customers that are overdue on invoices? Follow up with them to get payment. In the future, offer incentives to pay early, or in cash, and perform customer credit checks before allowing them to open a charge account and send invoices out immediately.
3️⃣ Review the bill paying process. When paying bills, can you setup a vendor account to pay on terms rather than upfront.
4️⃣ Slow moving inventory? It's not doing anything on the shelf. Run a special promo to get products moving for some quick cash into your business. This is also another reason to be reviewing inventory turnover regularly.
5️⃣ Take advantage of interest-free financing. This will allow you to take advantage of a new investment (which was planned for, of course) without having to commit 100% upfront.
6️⃣ Open a business savings account. Savings accounts aren't just for personal finances; they're critical for businesses as well. They're important to have when planning for future investments, but they're also helpful when financing or capital contributions may be difficult to come by. Pandemic ringing any bells?

Overall, cash flow review and forecasting is an integral part of planning for growth, for any business. Email the team at info@progresscandc.com so we can help you see your business, better.