Countless business decisions are made around the reality of cash flow; if you’re in the negative, then loans and restructuring become a stark reality, whereas if you’re in the positive, business expansion often becomes a reality. Because of its importance, here we provide five tips to help you shore up your cash flow.
1 Financing Options
Basically, there are two general options when it comes to financing: short-term and long-term. The former is often used to make up the difference between payables and receivables, and the latter is employed for big acquisitions so as to help preserve your working capital (cash flow). To bolster the short-term financing option, you can also offer discounts or use factoring to expedite the maturation of your receivables.
2 Asset Liquidation
If your business has assets that are more or less languishing, then one way to significantly improve cash flow is to liquidate these. In particular, machinery and equipment are the most common assets that companies liquidate for this purpose. Although tax-deductible donations are possible, you’re in need of cash so the latter is preferable. With Murphy’s Law, computer equipment doubles in ability every couple of years so it behooves you to liquidate as soon as possible.
3 Take an Accounting of Business Risks
This allows you to factor the risks into your long-term plans. Can you handle a large order if it is placed suddenly? Do you have the funds necessary to keep the business going in case a client defaults? Take the time to make a spreadsheet in Google Workspace (or other) and factor in possibilities to see what the financial outcome would be.
4 Optimize Your Cash Flow System
Sometimes, you may be losing money simply through inefficiency. Streamline your invoice acceptance/delivery process manually or with accounting software.
5 Implement a Bank Account Exclusively for Business
Do not mix your personal account with your business account; this can give you an incomplete picture of the actual cash you have on hand.
To learn more about cash flow solutions for your business, contact the team at Bold Growth Solutions.