Knowing you need to maintain a positive cash flow may be Business 101, but actually making that happen can be harder than anticipated. Whether you’re just getting started or managing an established business, these tips can help you improve your cash flow.
How to Improve Cash Flow
1) Send invoices immediately. Always send out your invoices in a timely manner. The faster invoices are in your clients’ hands, the more likely you will be paid quickly.
2) Get paid on time. Don’t wait until your outstanding invoices are weeks overdue to touch base. Send reminders as the due date approaches. Many invoicing systems can automate this process by sending reminders at set intervals.
3) Strategically manage expenses. Sometimes it can be easier to decrease your expenses than to increase sales. If you need to increase cash flow quickly, analyze business expenses. Identify expenses that can be cut, then see if any others can be decreased by finding a less-expensive alternative.
4) Understand your break-even point. Knowing exactly where you’ll break even is important in knowing whether your cash flow will be positive or negative during any given month, quarter, or year. Get familiar with your finances and keep track of how you’re tracking against that break-even point.
5) Regularly analyze cash flow predictions. Cash flow predictions are just that, predictions. Regularly revisit your predictions to determine how actual sales are performing against those predictions. Adjust as needed and make changes to expenses, as necessary.
6) Open a business savings account. A business savings account helps you set aside money for months when cash flow might unexpectedly end up negative. And you earn interest on those funds while you’re not using them. Contact our team if you want to chat about the best business savings account for your situation.
7) Open a line of credit. A business line of credit gives you access to funds when you need them and only requires paying interest when you use those funds. This can be a flexible way to have access to money should a month not go as planned. Give us a call at 877.325.8031 to talk more about business line of credit options.
Work with your Traverse City Community Bank
Honor Bank is committed to helping local business stay local with competitive banking alternatives rooted in this community. Our business banking team understands the unique market in this region and can work together with you to develop the banking options that work best for your business.