4 Ways To Amplify Your Cash Flow

Cash doesn’t always flow how you need it to.  It can start from customers who pay late to suppliers who have suffered some setbacks.  Building a cushion in your bank account isn't a complicated concept; instead of having just enough to pay bills and staff, it is time to have a more significant amount in the account.  An amount that will not only allow for timely payments of monthly billings but enough to transfer into savings.  Maintaining a smooth cash flow requires juggling many aspects of the business, such as staying on top of “pending cash,” also known as accounts receivable.

Cash flow is the life of an organization; it’s a means to pay salaries, buy supplies and make stock investments.  As the statistics have shown, owners who cannot efficiently manage their business cash flow are almost certain to fail.  To improve cash flow and sustain growth, it will be important to build a cash cushion.  Cash reserves enable companies to cope with business disruption, deal with seasonality, and manage slow-paying customers.  In addition, it allows a business to take advantage of new opportunities should they arise, and plan for future growth by having investment capital available.

Here are just a few tips on how business owners can boost their cash flow:

• Avoid Surprises:  Anticipate future needs instead of searching for cash when you are desperate.  Review your balance sheet at least quarterly to calculate available cash which can also help your business’s financial health on any given day.

 

• Build Connections with Lenders:  Building connections in the financial community before you need their help may increase the chances of a business owner being able to secure a loan.

 

• Balance your client base:  Many services professional companies – such as real estate management firms, PR agencies, accountants, and attorneys, they work with certain clients on a project-by-project basis.  These management of services leaves open a door of opportunity to convert some of these clients to a retainer relationship, where they pay you a set amount of money per month for a certain number of services.

 

• Develop methods to increase cashflow:  There are a number of ways to consider when building your cash flow.  Start with requiring a security deposit equal to 50% of the order.  Another option is layaway programs, allowing customers to select a specific program or product that is then reserved for future payments and delivered when payment has been completed.

 
The efforts to implement meaningful business changes will be a combination of lessons learned.  Building and keeping an adequate accumulation of cash provides maximum opportunity and flexibility to any business.
 
Fontenot & Associates Solutions, LLC recommends identifying the method or strategies which work for your business culture.  Building a stable long-term business means having sufficient liquidity and a developed and executed form of policy and procedures with clarity defined goals.