How can companies improve their cash flow?

October 28th, 2014

 Do you know the best ways to improve cash flow?

When you are a small-business owner, cash flow is often the top concern you have in your day-to-day operations. While the flow of funds in and out of your business can sometimes be a challenge to get under control, it is also easy to get right, provided you have the right tools at your disposal.

So how can companies achieve a better business cash flow? Here are three great places to start:

Review your stock levels

Often, cash flow can be limited because your business is retaining stock, meaning that your company's cash is being constantly tied up within your organisation. While it can be reassuring to know you have plenty of goods on hand, it isn't a great way of creating a sustainable business.

Reviewing your internal processes so that valuable finances aren't being caught up in maintaining a large stock room will be essential for keeping a business turning over stock quickly.

Use debtor financing

Sometimes, there will be clients who just refuse to pay on time, which will only make it harder for you to keep cash flow positive and build a successful firm. In this situation, it is worthwhile looking for alternative finance methods that can accommodate your growing business.

Debtor financing is one such option, and can easily be used to remove a lot of the risk that comes with maintaining a company's cash flow.

Don't forget your outgoings

Managing your outgoings will be just as important as finding ways to boost your own invoicing methods. Looking at ways to reduce your expenses  is a good start, but it can also be worth looking for ways to manage the overall flow of your own bills.

Taking the time to understand how finances move through your business, and staggering payments if necessary so they are not all draining your resources at once, can be an easy way to ensure your business remains profitable.

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