<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=349935452247528&amp;ev=PageView&amp;noscript=1">
Search
word-map-thumb

The Alternative Board Blog

5 Ways to Boost Cash Flow in 2022

Jan. 5, 2022 | Posted by The Alternative Board
finance

We’ve said it time and again—the state of a company’s cash flow is among the most significant metrics that every CEO or business owner should track. That’s because cash flow “is a key indicator of the financial health of your business,” as Wells Fargo notes. “A consistent, positive cash flow can help you pay expenses, invest in new opportunities, and grow your business.”

As business agendas go for 2022, you can’t do much better than that.

Here are some key tips to help boost your company’s cash flow in the new year:

1. Look at where your finances are today.

There’s no better time than right now to closely review the cash flow situation within your company. As we have suggested before, “Ask your finance team to closely scrutinize all areas where money is being spent.” In fact, consult anyone in the company who has “a close financial understanding of your business” to help you “re-set priorities that emphasize cost reduction, not spending.”

2. Take a strategic approach to paying bills.

It might sound counter-intuitive but trying to pay bills as soon as they come in isn’t necessarily the best strategic approach to boosting cash flow. Focus instead on making payments based on priority of importance to the business (rent, payroll, etc.). When possible, stagger payments to avoid feeling pressure to pay everything at once.

Speaking of paying bills, the start of a new year marks a good occasion to renegotiate contracts with your vendors. Pin down just how much is regularly spent with these suppliers and then investigate what competing vendors might charge for the same types of products or services.

Suppliers who want to retain your business will usually be amenable to offering discounts or a flexible spending plan that allows you keep a healthy cash flow in place.

3. Encourage prompt payment from customers.

Having a steady flow of incoming revenue is essential to healthy cash flow. That’s where accounts receivables come in. The management accounting firm GrowthForce recommends several actions you can take, including:

  • Request an initial deposit or partial payment at the beginning of a project with a new client.
  • Alter your accounts receivable system so that clients receive your invoice immediately upon delivery of products or services, instead of invoicing for services rendered on a pre-specified day of the month.
  • Do a comprehensive evaluation of past due clients and take action to make the appropriate payments, even partially or in a staggered payment schedule.

Finally, do all you can to make customer payments easier to complete, as, for example, through mobile or electronic payment options.

4. Keep a close eye on inventory.

Products that sit in inventory for long periods of time represent a potentially significant drain on your company’s cash flow.

“Do you have slow-moving or obsolete inventory on hand?” asks Peter Wares, Owner at TAB Windsor-Essex, Chatham. “If you do, get rid of it! Sell it off at a discount. Otherwise, it will just sit there collecting dust.”

Want additional insight? Read 9 Steps to Safeguard Your Business to learn more

DOWNLOAD

5. Do a better job of forecasting.

In many cases, companies have sufficient experience to engage in detailed financial forecasting for the year (or years) ahead. Scott Morris, Director at TAB East Auckland, offers these methods to make forecasting easier:

  • Do it quarterly.
  • Group accounts into categories.
  • Trends are your friends — use rolling three months and rolling 12 months when possible.
  • Measureactuals against forecasts each month to improve your forecasting skills.
  • Work with a trusted advisor.

“If your forecast shows that your company is not generating cash for the business, you know it's time to take action on your expenses, working capital, or capital expenditure budgets,” adds Peter Santry, Owner at TAB Fairfield County, Connecticut.

Want to learn more about maintaining a healthy cash flow in 2022? Check out our free TAB Boss Webinar, “How to Take Control of Your Cash Flow with Forecasting.”

Read our 19 Reasons You Need a Business Owner Advisory Board

DOWNLOAD

Written by The Alternative Board

Related posts

5 Cost-Cutting Tips for the New Year
Jan. 3, 2022 | Posted by The Alternative Board
In 2022, businesses will continue to adapt to changing conditions in the global marketplace. But as much as things change, certain operational fundamentals remain the same. Key among those...
Financial Reports Every Business Needs
Dec. 15, 2021 | Posted by The Alternative Board
For the smooth running of a small business, no paperwork may be more essential than financial reports. These documents inform business owners and CEOs about the success or lack of success in past...
Planning for a New “Back to Normal” Year
Dec. 7, 2021 | Posted by Phil Spensieri
For many businesses, the start of 2022 is looking very promising. With COVID-19 cases relatively low, high vaccination rates, re-opening of industries, and overall optimism increasing, there’s...
Is Your Workplace Prepared for Employees to Return?
Nov. 2, 2021 | Posted by Phil Spensieri
Over the last few months, many business owners have been planning for the much anticipated return of their employees to the physical workplace. I’ve spoken with many of them who are optimistic yet...
How to Reduce Organizational Complexity and Boost Productivity
Sep. 2, 2021 | Posted by The Alternative Board
  As in our daily lives, the world of business has grown a great deal more complex in recent times. Generally speaking, every organization finds itself challenged by innovations in technology,...
5 Ways To Tell When Your Business Needs a System Overhaul
Aug. 17, 2021 | Posted by The Alternative Board
We all know that businesses need to accomplish many tasks each day for their companies to function. And they need to complete those tasks efficiently, smoothly, and quickly to thrive. As an...
3 Ways to Successfully Transition Your Business To New Owners
Aug. 5, 2021 | Posted by The Alternative Board
Transitioning your business is one of the most critical and life-changing decisions you'll make as a business owner. If you handle the process well, you will be helping not only yourself, your team,...
Tips on Grooming Your Business Successor
Aug. 2, 2021 | Posted by The Alternative Board
It may not seem possible now, but the day will come when you no longer run your business (either as a CEO or business owner). Recognizing this inevitability is the first step towards selecting and...
When It’s Time To Sell Your Business
Jul. 15, 2021 | Posted by The Alternative Board
After all the hard work that goes into starting and maintaining a business, deciding years later to sell that business can be among the biggest challenges in a CEO or business owner’s career. You’re...
A Guide For CEOs —11 Ways To Make An Impact In Your First 90 days
Jul. 13, 2021 | Posted by The Alternative Board
Your first 90 days as CEO will set the tone for your entire tenure in the organization. Therefore, this is a crucial time, and the goal is to establish your credibility and trust, so the team and the...