Jul 28, 2009

Improve Your Cash Flow

Here's the second big-picture strategy from my save your business list:
2. Improve your cash flow.
Having enough cash flow to pay your bills can include spending less (cutting overhead and office expenses, reducing employees' hours or benefits, moving to a cheaper location, or selling pricey equipment) and bringing in more cash (giving a discount for prompt payment, stepping up your collection efforts, or getting customers to help you get rid of some inventory).

A recent article on about.com had some good ideas on improving cash flow and collecting accounts receivable faster:

  1. Don't wait until the end of the month to send invoices.
  2. Ask for partial payments (break a job up into phases so you can bill earlier).
  3. Give your customers or clients a discount for paying early.
  4. Make calls on accounts receivable regularly.
  5. Pay bills only when they're due.

This last one I agree with only to an extent. As I talked about in a prior post, if you're not hurting for cash, paying a bill a few days early can benefit you in several ways, even if you don't get a discount.