Business is actually quite simple ― generate positive cash flow, and hopefully lots of it. In practice, however, it is a little harder to accomplish. Here’s some practical advice to improve your cash flow in the following five areas: Expedite Cash In, Optimize Cash Out, Increase Revenue, Decrease Expenses, and Save Taxes.
Optimize Cash Out
15. Demand trade credit from your suppliers, vendors, and contractors.
16. Take early-pay discounts if they are for at least 2%. If they are less, they are usually not worth it.
17. Deduct employee-paid premiums one month in advance. You should have the money from the employees by the time you pay the bill.
18. Renegotiate vendor/supplier contracts.
19. Improve asset productivity with more volume, an additional shift, or technology.
20. Avoid giving advances and loans to employees and others.
21. Refrain from the temptation to take money from your successful business and invest in another business in which you have little or no experience.
22. If chargebacks are likely, hold back a percentage of the payments you make to vendors and then settle-up with them once the chargeback is incurred.
Ken Kaufman, Founder & CEO of CFOwise®, serves as the Chief Financial Officer for a dozen start-up, emerging, and medium-sized businesses. With almost two decades of experience and as an adjunct professor and published author, Ken focuses his professional efforts on helping entrepreneurs maximize cash flow, improve profits, and obtain clarity.