subject: Business - Increase Company Cash Flow In Small Business [print this page] Increase cash flow refers to the strategies a business can use to improve the amount of money flowing in and out of the business. Increased cash flow illustrates a businesss ability to implement better management procedures and improves the profitability of the business. There are many ways a business can increase its cash flow without having to borrow more money.
Many business owners offer discounts to customers who pay their bills early. Offering a small incentive to pay off an account within ten days increases a businesss chances of getting paid and builds a better relationship with customers. Another way to increase cash flow and improve client relationships is to offer customers gifts or gift certificates instead of taking them out for a meal. Gifts and gift certificates are completely tax deductible, but only half of the cost of a customer meal can be exempt from taxes. Its also a good idea to avoid clients who are slow to pay their debts or who do not pay them at all. A quick research of the clients credit references will help a business owner decide whether or not to accept the client.
Businesses can also increase their cash flow by paying the debts they owe promptly. Businesses usually assign an employee to manage the billing to make sure debts are paid on time every month. Owners may even negotiate with creditors or contractors to pay their debt in monthly installments instead of having the entire debt due at the completion of a contract.
To increase company cash flow, a business must reevaluate and modify its strategies of managing working capital. Businesses can implement new management strategies regarding customers, employees, and payments in order to increase its cash flow.
The first way to increase cash flow is to make sure customers pay on time. If timely payments become a significant problem, consider applying late fees to those accounts. This will give customers more reason to pay a business as soon as possible. The opposite is also true: giving customers a discount for paying early also increases their likelihood to pay sooner.
Another way to increase cash flow is to handle employees wisely. When in need of capital, business owners should pay themselves last. Its best to make sure that the company and its employees are operational. Owners may also consider using temporary or part-time help in heavy sales seasons. Its much easier to lay off or cut back the hours of temporary employees than permanent ones. It also helps to give current employees more responsibilities. For example, instead of hiring someone to manage inventory or accounts, let the secretary do it. This greatly decreases the number of employees, and paychecks, a business has to deal with.
Business owners can also increase company cash flow by paying bills only when they are due. If many bills are due at one time, and money is tight, pay the ones with the highest late fees first. Its also helpful to work with creditors to renegotiate payments and terms.
by: Barbara
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