How to Improve Your Cashflow

The old adage that ‘cash is king’ certainly does ring true in the world of business. Maintaining the cash flow of your business is always an ongoing priority. To put it simply it enables you to remain in business. The absence of cash may lead to your business being in debt. Being in debt is only worrying if those debts cannot be serviced because of poor cash flow.




The following are ideas which can help to improve your business cash flow. On an individual basis they may have a minimal impact. However, cumulatively they can add significantly to your cash flow.



Increase your credit lines. Taking a little longer to settle with your suppliers, will ensure that money remains in your business longer. Reviewing your creditors and the payment schedule that they are on will give you a better idea of how your payments can be spread out. Extending your credit terms with suppliers by two weeks will make a significant difference to your cash flow.

Request a payment confirmation date. Knowing when your customers will be paying you will enable you to accelerate and predict future payments. Customers are more likely to pay promptly if they have a payment date in mind. Equally less time will have to be spent chasing outstanding sales invoices.

Use a credit card. Most credit cards will not incur interest payments providing that the balance is cleared at the end of each month. Using a credit card for purchases can effectively give your business a month’s credit to ease your cash flow.

Do a stock inventory. More than likely there are many stationery items, office equipment or raw materials hiding in cupboards that have been forgotten about. Using these items can potentially reduce the cost of reordering and the duplication of stock. Ordering when required has now become a standard policy in many businesses to avoid wastage.

Set 5-10% cost-saving targets. This methodology can be applied to any aspect of purchases you make within your business. Simply set a target to reduce a particular aspect of your expenditure by 5-10% and then look for ways to achieve that saving. For example, you may be able to save on the cost of your purchases by being more prescriptive about the items that staff are allowed to order. Save money on your telephone costs by discouraging calls to mobile phones where possible. It is also possible to save money by reducing the number of business related journeys that are made.

Shop around for utilities. Seeking alternative suppliers of utilities will save money on your ongoing costs. There are many companies that offer discounts depending on the number of services you receive from one provider.

If you institute just a few cost saving ideas, you will make considerable savings on your outgoings. Saving money improves cash flow and increases the profit margins of your business. Implementing cost saving methods will ensure that your business operates at maximum efficiency.