Back to list August 14, 2018 Tips to Improve Your Cash Flow Cash is king.” Everyone who’s run a business has presumably heard this at some point or another. Business cash flow is a serious venture and says a lot about the future of your business and its sustainability. Cash comes in as revenue and later becomes payments to help make your business run successfully. An estimated 600,000 new small businesses start every year. About two-thirds of that group will last two years in business. Some 44 percent will make it to four years. Only 31 percent survive for longer than seven years. Cash flow management is important for all small and mid-sized businesses to stay alive. The most common reasons for companies’ failures, due to cash flow, are attributed to insufficient capital, lack of experience, bad location, poor inventory management or over-invested fixed assets. To combat all of these problem areas and make sure your business stays alive, follow these three tips to improve your cash flow as you conduct your day-to-day business transactions. Stay on Top of Invoicing and Receivables Invoices will prompt payment from your customers, so don’t delay the production and distribution of them. Whether your business delivers products or completes services, make sure your customer receives their invoice after you finish your end of the deal. A tempting way to convince your customers to pay their bill at the time of their invoice as opposed to weeks later is to offer a discount. Customers will begin paying quicker and more on time when they know they’ll receive a special discount. You should also cater to the needs of your customers by updating your technology. Creating a mobile app or even a mobile-friendly website will encourage customers to quickly and efficiently pay a bill at the time of their invoice, rather than waiting for the post office to process and distribute a check. Cut Costs Give your expenses a thorough analysis and find areas that are reducible. Are you paying an enormous amount for your business’s utilities — some of which you don’t fully use? Or maybe your rent has skyrocketed recently due to amenities or charges you’re not responsible for? Perhaps your vendors are charging you for additional software or program subscriptions you don’t use or even have a need for. Whatever it is, there should be some area of your business that you can effectively cut out or cut back to ease your expenses. In addition to cutting costs, you can also look at areas to increase your cash. Locate the inventory you’ve been housing for months or years that isn’t being sold or used. Additionally, locate items that are “out of season” and won’t be a big commodity with consumers anymore. Liquidize this inventory and generate quick cash. Funding As with any business, an occasional hiccup will happen along the way. Short and long-term cash flow issues might arise out of nowhere and you’ll need some additional financial assistance. This is where bank partnerships and good relationships with vendors will factor into your cash flow management. The best way to secure a good relationship that will help you in your times of need is to establish and communicate before you need help. Set up a business-specific account with your bank to process payroll — then, in your time of need, the bank will already know you’re a reliable client and can furnish the loan. You always want to build a connection with your lenders, who can help you secure accounts receivable, inventory and equipment through loans. Small businesses operating in Cumberland County are encouraged to reach out to CAEDC to create strong funding relationships and manage your cash flow. There are multiple financing programs provided by CAEDC, whether you’re looking to assist your security in real estate, equipment, machinery or working capital. Take a look through our programs and connect with us as we create funding solutions to improve your cash flow. We will work together to understand your project in full, identify funding sources for your business, analyze options, identify a narrative for your cash flow projections and communicate with stakeholders who can directly help your business. Whether you need governmental or administrative assistance, CAEDC will help you improve your cash flow to keep you operating for years to come.