By: First Union
8 Ways to Improve Your Small Business's Cash Flow 2021
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Without steady cash flow, your business could be in some serious trouble. A lack of cash flow could very well mean you fall behind, even accrue more debt, and this will cripple your everyday operations. Below are eight ways that you can improve your cash flow and thus keep things running smoothly along.
- Don't delay invoicing. Get those invoices out ASAP. If you hold off even a week, the customer maybe just a little less likely to pay promptly.
- Switch to electronic billing. Most people pay nearly all of their bills electronically. It's more convenient for everyone this way and will help get you paid faster.
- Make sure to include a due date. "Due upon receipt" can often be misinterpreted and simply isn't clear enough. Have an actual specific date on the bill or a sentence along the lines of "within 14 days of receipt."
- Enforce late fees. Late fees are very often an incentive for customers to make sure they pay on time.
- Offer discounts for early payment. By the same token, customers may also be encouraged to pay early if you offer them say a 1 or 2% discount for doing so.
- Pay bills when due. Sure, paying ahead is great, but if cash flow is an issue, then you may want to slow down and instead pay your bills on the due date.
- Periodic payments. If paying periodically or via an installment is an option, then take it. This can help free up money as opposed to you paying off bills in one lump sum which could put a strain on your cash flow.
- Monitor your cash flow regularly. A simple strategy, but one many small businesses don't do often enough. Keep track of everything coming in and going out—do this weekly.