Positive cash flow s the life blood of any business. So when it’s starts to go wrong, alarm bells should be ringing in your head. Managing your business’ cash flow is a process as important as your marketing strategy or product development because without it, none of these things would exist. To help you get your cash flow under control, check out these useful tips.

1. Stay on top of invoicing-  The quicker you get paid by customer the better for your cash flow. Always invoice a customer as soon as you deliver or complete the service. A greater delay in payment hurts the cash flow.
2. Offer incentives to pay quickly – Consider offering a small incentive if a customer pays within a short period of time upon being invoiced. For example, one can offer a 2% discount off the invoice total if the customer pays within the first 5 days of receiving the invoice. If the majority of your customers take you up on this offer, your cash flow can benefit greatly.
3. Evaluate credit histories – Before extending credit to new or existing customers it is recommended that one performs a credit check. Customers that are unable to pay their invoices will not help your cash flow because your cash will remain in accounts receivable for long periods of time and may not be paid at all. If customers have negative credit histories that does not exclude them from doing business with you, but you may be able to customise another discount that works for you and your customer.
4. Invest adequately – During periods of increased cash flow, one must remember to invest the excess. Money is not working for you if it simply sits in a checking account that does not earn interest. To make the most of your money one needs to invest excess money in either savings accounts, money markets or certificates of deposit. Your business banker can likely connect you with a wealth management professional that is well versed at business investing and can guide you if investing is not your expertise. Simply contact your business banker to get your money working for you.
5. Budget, budget, budget – Sticking to a budget is the first step to successful business management. It allows one to know when to stop spending and it also guarantees that your business can pay its bills on time.
6. Pay on time but just before the due date – Definitely avoid paying your bills late but paying just before the due date keeps cash in your account longer which improves your cash flow. For example, because one of your invoices indicates terms of net 30 days means that you are safe to ensure payment is received on the 29th day and no sooner. You do not get billed with a late fee and your cash remains in your account for the maximum days possible before payment is made.
7. Access your pricing structure – Some companies fail to increase prices for different management reasons. However, staying in-line with competitor’s pricing is important and business occasionally need to make sure that their pricing is competitive. Raising prices can boost cash flow quickly. Businesses simply cannot stay in business if they are not competitively pricing their services or products. Before raising prices, conduct a comparison with your competitors to determine your new pricing scheme.
8. Have a backup plan – Excessive debt is never recommended, but having available credit outlets is recommended. Opening a line of credit or a business credit card is a perfect backup plan. You can fall back on this option if you want to buy yourself some time and keep your cash flow untouched. Contact a financial institution that you currently do business with since they are familiar with your needs and your history.
9. Limit excess supplies – Every business needs a surplus of supplies and inventory, but watch your numbers carefully. Stagnant inventory hinders cash flow because it is not generating revenue on the shelf. Hence, only order adequate inventory to keep you afloat according to your current orders and performance. This reduces unnecessary expenses on excess inventory as well as product that is not generating income.
10. Work quickly and efficiently – The quicker that you get your products to your customers, the quicker they receive the invoice and pay which generates cash flow. That being said, work effectively, but ensuring that you are getting your products delivered efficiently ensures that you will have improved cash flow.

Contributed by FinanceChoices.co.uk, a money comparison service based in the UK.

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