- The top way for any business to maintain healthy cash flow is to establish an online invoicing system. Make sure that your invoices are well-designed with due date and amount due fields distinct. Shorter credit terms for customers means better cash flow for your startup, so feel free to notify customers that your credit terms have been modified to 15 days or due on receipt. Follow up regularly with all accounts past due and keep a follow-up log to track which customers have difficulty paying on time.
- In addition to online invoicing, make sure to provide different online payment options. Your business is much less likely to get paid in today’s digital age if customers are expected to mail a check. More ways to pay translates to better cash flow. Most online payment methods involve merchant fees, but they are usually worth it because they contribute to healthy cash flow.
- Another trick to maintain good cash flow is to pay bills when they are due, not two weeks before they are due. The same method applies to credit card payments. This practice presumes a bill-tracking system, which may require some initial setup, but is well worth the effort.
- Reducing unnecessary expenses is the most obvious way to improve cash flow. It is a good idea to conduct a monthly review of expenses to determine which costs should be cut.
- To maximize your company’s positive cash flow, it may be time to consider revamping your marketing strategy or creating supplemental revenue streams. The possibilities for expansion are endless and only limited to your creativity.
If you need assistance with improving cash flow or are interested in our CFO/Controller services for small businesses, feel free to reach out to us at info@urbanaccountingllc.com.
Writer: Urban Accounting Team
