Strategies On How To Maintain A Positive Cash Flow

  • Credit Management
  • Jun 08, 2022

Introduction

What is one cash flow approach that can assist a business in generating positive cash flow?

We asked business executives and professionals for their best advice on how to produce positive cash flow. There are various ways to achieve positive cash flow, ranging from starting the business to raising your prices.

Many parts of the business are difficult to comprehend. Is it better to expand swiftly or to grow organically and slowly? Is it better to support a risk assessment and mitigation project or recruit a new employee? These aren’t simple questions to answer, no matter how important they are. However, there are some parts of the business that are rather clear, and one of them is cash flow. You won’t have a positive cash flow if you’re spending money quicker than you’re taking it in.

And, to be clear, you must have a positive cash flow.

“You will have a far easier time obtaining positive cash flow if your expenses are lower or paid out more slowly.”

Read on for practical ideas for positive cash flow if you’re having difficulties keeping your head above water in the cash department, or if you just want to improve an already-rosy image.

1. Put down a deposit and set goals for long-term objectives

It’s nice to land huge assignments with big paydays, whether you’re a restaurant with a catering business or a graphic artist.

However, if your work is spread out over weeks or months, it can be difficult to keep up with your payments, especially if you have to put off other assignments in order to finish your major one.

Is there a way out? Make a deposit and set goals for yourself. A deposit will not only ensure that your client isn’t merely seeking the greatest value, but it will also make obtaining supplies and equipment easier for them to devote time to their project.

Bringing money in early on in the project can assist you to maintain your cash flow.

2. Consider a discount if you pay right away

Those of us who bill for services or products are accustomed to mailing bills and waiting for checks to arrive. I’ve had a lot of success offering a small discount to clients who can pay right away.

3. Increase your costs

It may sound contradictory, but bringing in more money is one of the best strategies to maintain a positive cash flow.

If your industry is competitive, and you’re concerned about losing business as a result of the increase, consider changing your pricing for new clients while keeping the old rate for existing clients.

Alternatively, you might try a price increase on a small number of products or on a small number of existing customers.

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4. Provide a premium service or a package of services

Offering a premium product to your finest clients is another method to make them even better.

Combining anything that will save them time or money is a good idea. Increasing per-client spending can help you achieve a favourable cash flow situation.

5. Create a sense of anticipation for the holidays

Small sales surges, I’ve noticed, may be really advantageous in terms of generating revenue for my rainy-day fund or funding certain activities that I’m interested in. Maintaining good cash flow is dependent on your ability to handle unforeseen expenses. Building up a rainy-day fund or even maintaining a larger operating account buffer can be lifesaving. New product launches or seasonal promotions can help to establish that margin.

6. Work out a deal with vendors

More than just revenue is factored into the cash flow equation. Then there’s the issue of costs.

I’m often astonished at how many business owners don’t think to bargain with their suppliers for better terms or pricing. You might find merchants who are willing to offer 30-day periods at no extra charge. You might be able to leverage your value to secure better volume discounts from your suppliers. You might even be able to create a group with other local businesses to get bulk discounts or free delivery.

Positive cash flow is significantly easier to achieve if your expenses are decreased or paid out more slowly.

7. Put in place productivity-enhancing systems

Improving productivity is one of the most commonly neglected approaches to achieve positive cash flow. Consider this: If you could get more work done with the people you have, you could focus on bringing in more money!

Consider the tasks in your firm that must be repeated time and time again. How can you make them run more smoothly? When we streamline workflow, whether it’s for client communications, returns processing, or widget assembly, we free up workers for other tasks.

Conclusion:

A healthy cash flow is critical to your company’s success. A healthy business ensures that there is money left over at the end of each month. It’s what allows you to develop. It allows you to contribute to community initiatives that are important to you. It’s what allows you to keep your employees and accomplish good work.

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