<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=349935452247528&amp;ev=PageView&amp;noscript=1">
Find out where you can get a Taste of TAB... our global events blast is on!
Search
word-map-thumb

The Alternative Board Blog

How to Effectively Manage Your Small Business' Cash Flow

Apr. 9, 2019 | Posted by Phil Spensieri
analysis-businesswoman-chart-955447

In the past 30 plus years I’ve spoken to many business owners who have encountered cash flow issues over the course of running their businesses. The proper management of your cash flow can help you prepare for seasonal business lulls, plan for future financing, and provide you with an overall sense of confidence and control over a challenging aspect of your business.

Here are some of the best practices that I’ve found to be helpful in managing your cash flow.

What are some cash flow issues that can occur?

Most business owners who pay close attention to how much cash flow is at their disposal within a certain period (within a month, for example) have a stronger basis for maintaining positive cash flow throughout the year.

However, even if you are monitoring your cash flow closely, you may find that you’re still encountering issues. I see this occur most frequently with business owners whose industries are busier during certain seasons, such as construction, auto repair and maintenance, and catering. Service industries where demand is higher during certain times of the year may have difficulties averaging their yearly cash flow during the slower seasons.

Want additional insight? Best Ways to Secure Capital for Your Business now to learn more

DOWNLOAD

How can you improve cash flow?

  • Improving your cash flow is a process that may require an adjustment in your billing process. Taking steps to analyze your profitability, including the quality and pricing of your products or services, will help you tighten loose ends. This is especially true if you’ll be seeking financing in the future, as having an inventory of your assets could be crucial in times when cash flow is limited.
  • When looking for ways to speed up cash inflow, I’ve found it particularly helpful for business owners to introduce progress billing. Progress billing allows you to bill your clients incrementally as opposed to in one large sum. This practice ensures that you have money consistently coming in while you are working on your clients’ project, eliminating the waiting period for payment after the project is completed.
  • If you need to raise cash in a hurry, you can also consider changing the terms of payment, and offering incentives for alternative methods of immediate payment; direct deposit for example.
  • Selling off inventory, or leasing equipment instead of buying it is a viable option to help you maintain a healthy cash flow.
  • Think ahead when you’re planning any large purchases. A cash flow projection will help you plan your financing needs ahead of time.
  • Good cash flow management goes hand-and-hand with good business management. Take stock of your products and services to make sure your prices allow you to make the margins you need to be profitable.

Cash flow management can absolutely debilitate a company, leading to layoffs and poor profitability. However, by staying on top of your cash flow at all times, you can avoid future issues and maintain a profit throughout the calendar year.

For small business support on a peer-advisory board, and monthly one-on-one coaching, become a member of a TAB board today.

Read our 19 Reasons You Need a Business Owner Advisory Board

DOWNLOAD

Written by Phil Spensieri

Phil Spensieri is a TAB Facilitator in the York Region of Ontario, Canada. To find a TAB Board in your area, visit https://www.thealternativeboard.com/facilitators-world-map

Related posts

What Can Predictive Analytics Do for Your Business?
Jul. 19, 2023 | Posted by Lee Polevoi
Every business (yours included) generates a lot of data. Every customer interaction, sale, and follow-up report produce information of great potential use to the organization. The key is harnessing...
Ay Yi Yi: The Fascinating World of AI
Jul. 12, 2023 | Posted by The Alternative Board
Artificial intelligence. What once felt wildly futuristic has suddenly become mainstream and is growing more ubiquitous by the minute. You are likely already interacting with AI, even if you are not...
3 Surprising Trends That Will Change the Way You Run Your Business
Feb. 9, 2023 | Posted by The Alternative Board
There has been a lot of talk lately about Artificial Intelligence and how it is poised to change how nearly every business owner runs and grows their company. And it’s already happening. The recent...
6 Top Money-Saving Tips for Business Owners
Jan. 31, 2023 | Posted by The Alternative Board
While nobody has a crystal ball, a lot of signs are pointing toward an impending recession. Consumer spending is slowing. The employment market is volatile. Inflation, while ebbing, is still rearing...
How To Create a Profit and Loss Statement
Jan. 25, 2023 | Posted by The Alternative Board
A profit and loss statement, also often referred to as an income statement, revenue statement, P&L statement, or P&L, provides business owners and potential investors a comprehensive and easy to...
Ways to Handle Supply Chain Shortages
May. 17, 2022 | Posted by The Alternative Board TAB
You don’t need a crystal ball to see that supply chain disruptions are likely to continue for some time to come. As we are all becoming painfully aware, supply chain disruption “is a major factor ...
How to Achieve Business Success by Knowing Your Strengths and Weaknesses
May. 10, 2022 | Posted by Phil Spensieri
Over my years as a business coach, I’ve heard hundreds of stories about how and why my clients got into business. Each story differs, but one thing remains common: every one of them got into business...
Inflation Busters: 15 PAINLESS ways to Reduce Your Business Expenses
May. 5, 2022 | Posted by Joe Zente, TAB Austin
Inflation Busters: 15 PAINLESS ways to Reduce Your Business Expenses April 20th, 2022 “Frugality drives innovation, just like other constraints. One of the only ways to get out of a tight box is to...
Clamoring for Talent: 3 Ways To Improve Employee Retention
Apr. 29, 2022 | Posted by The Alternative Board
It is still a tough labor market out there. The Great Resignation and the dearth of eager job candidates are keeping business owners shorthanded and clamoring for new talent. In many cases, this...
The Importance of a Leadership Development Plan
Mar. 15, 2022 | Posted by Phil Spensieri
As a business owner have you ever given any thought as to who will replace one of your senior staff if they were to resign today? It’s a hard question, and the truth is no one really knows when...