How Small Businesses Can Improve Cash Flow

How Small Businesses Can Improve Cash Flow

Cash flow is important for businesses of all sizes. You might find yourself taking in higher sales and still find yourself cash-strapped if the money from those sales doesn’t reach your bank account in time for you to make your payments.

Understanding your cash flow and its importance will help you manage your accounts and ensure you always have enough funds available to pay your bills and grow your business. Having a positive cash flow is critical because it enables you to meet your current financial obligations as well as plan for the future.

How to Improve Cash Flow

Understanding-- A lot of small business owners don't have much formal training or experience in finance or accounting. To help keep things simple we review cash flow in days to fit easily into a calendar. Review cash inflow vs. outflow to ensure that the money coming in recorded and tracked. Review actuals against planned cash flow weekly or monthly.

 

Actions -- Once you understand the cash flow of your business you can begin to address the areas you want to improve: 

Pricing -- Optimize pricing on your products and/or services to ensure that you are driving profitable sales.
Organize -- Categorize income by type and set performance metrics for each.
Seasonality -- Review year-over-year trends to determinate and plan for seasonal spikes.
Operations -- Some top areas for small businesses often can improve are in marketing, overhead, and supplies. 
Takeaways 
There are no "one size fits all" approaches for improving your cash flow. Each small business is unique and requires a deep dive to build a custom plan. OPEX Collective is here to help small business owners to better understand their unique cash flow roadmap. 
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