How to Improve Small Business Cash Flow

Charlene M. Ives, CPA, PC

Charlene M. Ives, CPA, PC

  • Establish sound credit practices. Never give credit until you are comfortable with a customer's ability to pay.

  • Follow through on orders Fill orders accurately and efficiently. Not doing so will add days and weeks to customer payments.

  • Establish sound billing practices Bill promptly, with due dates and terms on your invoices. Try offering discounts for prompt payment.

  • Follow up on past due accounts The older an account receivable gets, the harder it is to collect.

  • Control your inventory It costs money to maintain too much inventory, and it is a waste of resources. Discounts on volume purchases may not always be worth it, if it means tying up your money.

  • Control your expenses Before taking on more expenses, make sure it's a worthwhile investment. Ask yourself: Will this expense allow you to improve services or products?

  • Keep a reserve of cash Decide on a minimum cash reserve and stick to it. Running low on cash all the time is demoralizing, and a drain of energy.

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