<img height="1" width="1" style="display:none" src="https://www.facebook.com/tr?id=290086984736480&amp;ev=PageView&amp;noscript=1">
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.

Related posts

What Does Workplace Health and Safety Look Like Now?
May. 14, 2020 | Posted by The Alternative Board
As businesses across the U.S. slowly begin to reopen, there’s renewed focus on what constitutes a safe and healthy workplace. From the start of the COVID-19 epidemic, business owners and CEOs have...
Ready To Reopen Your Business? Here Are 3 Questions to Consider
May. 5, 2020 | Posted by Phil Spensieri
As business owners, we’ve been waiting to receive the much anticipated “green light” to go back to work. As this day inches closer, you’ll need to devise a plan that addresses how your business will...
How to Reinvent Your Business from the Inside-Out
Apr. 30, 2020 | Posted by The Alternative Board
In so-called ordinary times, many businesses experience the need to reinvent themselves to meet changing customer demands. Today, months into the COVID-19 outbreak, the “reinvention challenge” is...
A Balanced Mindset for Weathering the Pandemic
Apr. 28, 2020 | Posted by Dave Scarola
Never has the entire global economy come to a screeching halt. In past recessions or natural disasters, we have always been able to look to previous and similar events. Even if the latest recession...
Tips for Business Owners and Employees Working from Home
Mar. 18, 2020 | Posted by The Alternative Board
The Coronavirus COVID-19 outbreak has changed virtually everything about the way business is conducted right now. For the vast majority of businesses across the U.S., this means shuttering workplaces...
Why You Need a Customer Onboarding Process as a Business Owner
Mar. 10, 2020 | Posted by Phil Spensieri
Typically, I meet business owners who do not have a customer onboarding process unless they are in the software or hardware space. In IT, deploying and installing software or hardware goes...
What an Operating Plan Is and Why You Absolutely Need One
Feb. 27, 2020 | Posted by The Alternative Board
Most companies spend valuable time and resources to create strategic plans, giving their best to outline a strategy that establishes a solid long-term vision. While having a strategic plan is...
Growth Explained: Ways to Expand Your Company's Potential
Feb. 4, 2020 | Posted by Grace Fenson
One of the main reasons why many businesses fail is due to lack of scaling. It's not enough to just have a good idea and an excellent marketing strategy. To remain competitive, you need to find new...
How to Prepare Employees for AI and the Future of Work
Sep. 3, 2019 | Posted by The Alternative Board
No one can say with certainty what the future of work will look like. But many elements are already in place, and employers should think long and hard about how their workplace will evolve as the...
What's the Difference Between Business Development and Sales?
Jul. 18, 2019 | Posted by The Alternative Board
At first glance, there doesn’t appear to be much distinction between business development and sales. Aren’t both activities geared towards generating more profit for the organization? Isn’t a sales...