As a small business owner, looking for ways to increase cash flow is basically your second job. You’re almost ALWAYS trying to figure out how to make more and/or how to keep the cash flow consistent. I came across Victoria Yore’s piece on Huffington Post entitled, “5 Innovative Ways To Increase Small Business Cash Flow” and quickly knew why “innovative” was included in the title; she listed things that could actually make a difference in your small business. She immediately reminded small business owners that cash flow is not profit and profit is not cash flow. I repeat, cash flow is not profit and profit is not cash flow; therefore, it is entirely possible to improve cash flow without increasing sales.
Victoria listed things such as decreasing the time it takes to collect clients’ payments and shifting your costs from fixed to variable. Once your client has received your service and/or product, it is time for him/her to pay up! If you want your cash to flow, payments need to align with your performances. After studying and meeting many entrepreneurs with various businesses, I’ve also learned a few ways to increase cash flow myself:
Create incentives for early payments and penalties for late payments
Discounts could apply to any invoice paid early while interest could be added to any invoice not paid by the due date.
Improve your marketing
Learn how to boost your company’s image
Re-evaluate your prices
Does your price reflect the value of your service/product?
I hope Victoria and I’s methods help your small business!
What methods do you use to increase your cash flow as a small business owner?
To read Victoria’s full list of ways to increase cash flow, click here!