6 Steps to Increase Your Business Cash Flow

Canadian bills

Your company’s sales and revenue may look healthy, however, if the money you have to pay out leaves your business before the money you are owed comes in, this will result in negative cash flow.  If you are unable to pay your company’s bills, this can lead to even bigger problems like bad credit and insolvency.

If your cash flow needs a boost, these simple steps will put you on the right track.

  1. Plan your year: Cut out unnecessary expenses or choose a cheaper alternative.  Streamline your business processes by using software like QuickBooks Online.  Purchase equipment that is more efficient or consider leasing equipment. Estimate your annual expenses and consider any additional costs you may incur.  Add these expenses to the everyday costs of running your business such as payroll, rent, utilities, loans and interest.
  • Make projections: A rolling 12-month forecast is the best practice for most businesses.  If you make weekly projections, you will know when to expect surges in expenses as well as when several payments may become due all at once.
  • Arrange financing:  It is best to arrange financing when your bank statements are healthy.  Do not wait until you are desperate for assistance.  You will receive better interest rates and a higher lending amount if you are viewed as a low risk client.  Other suggestions include opening a high-interest savings account for saving cash; considering a cash-back business credit card; taking out a small business loan and establishing an inventory line of credit.
  • Monitor and adjust: Review your projections on a monthly basis against the actual numbers to see if you are on the right track.  Make adjustments accordingly.
  • Hire a trusted advisor:  A KWB professional can help with a complete analysis of your cash flow within your business as well as creating financial projections and monitoring your progress throughout the year.
  • Reassess your Accounts Receivable process: Invoice immediately and get customers to pay invoices in a timely manner. Offer early payment incentives or apply late payment penalties. Use programs that tie into Quickbooks Online (QBO) like Jobber for invoicing in the field, Plooto for accepting payments and InvoiceSherpa to help with AR (Accounts Receivable) collections and automated reminders as well as accepting payments.

 

For more information or to book a consultation with a KWB professional email us or call us at 780-466-6204.

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