The higher your cash reserves, the more management flexibility you have. Lose your cash reserves, and your management focus gets locked into finding cash.
If you have trouble meeting payroll, then take advantage of the ten proven ways to improve business cash flow today.
Overview
To improve business cash flow, you must fully appreciate the two most critical cash terms. The first is Cash Velocity—the speed of cash flowing in and out of any business. The second is Cash Quality—the degree of business excellence in sales, operations, and finance.
Below are ten management options to consider for improving business cash flow listed in order of ease of implementation. The first four are particularly helpful in overcoming a temporary negative cash position …
- Speed up cash receipts through cash deposits and reduced terms on future sales.
- Collect on past-due A/R (Accounts Receivable) from all of the customers who owe you money.
- Delay or reduce recurring expenses.
- Delay or reduce payments to existing suppliers and vendors.
- Reduce direct costs (COGS) in future work.
- Change supplier terms to delay paying COGS on future work.
- Delay, pay down lesser amounts, or borrow greater amounts against capital expenses.
- Sell underutilized assets to free up cash.
- Increase future sales.
- Increase the money invested in the business.
The higher your cash reserves, the more management flexibility you have. Lose your cash reserves, and your management focus gets locked into finding cash. If you have trouble meeting payroll, then take advantage of the ten proven ways to improve business cash flow today.
