Improving Cash Flow for Small Business Owners

Cash is King. It’s certainly what every business needs, no matter what your profit margins or overall revenue is. But what happens when cash flow runs thin? A few things can cause thin cash flow or not being able to access cash. Sometimes, it could be tied up in unsold inventory or receivables. In either case, if you can’t access your cash, expect to face some challenges.

Especially for small businesses, maintaining a healthy cash flow is important.  Doing so gives you the ability to not only meet your financial obligations, but it allows you the room to grow your business through new opportunities – all while paying your bill, of course!

What is Cash Flow?

Simply put, cash flow is the money coming into and going out of your business. If you have positive cash flow, that means you have more money coming into your business –through sales or loans – than going out to cover expenses such as payroll, inventory, and rent.

Here’s what you should know to understand better and manage cash flow for your business.

Understand your cash flow cycle

A cash-flow cycle is defined as cash flow through a business as products are manufactured/created and sold, and payment is collected. This differs for every business.  Business owners should be able to answer these questions at any given time:

• What happened to your cash last month?
• What’s going to happen to your cash?

To answer these questions, you need to keep your balance sheet and profit and loss (P&L) statement updated. Keeping “good books” is crucial to any business. If you do this, you will understand your cash flow cycle in and out. Once that happens, it should be easy to spot and correct inconsistencies within it.

Move inventory fast

Experts say that to maximize your business’s cash (at any given time), it’s important to turn over your inventory quickly. Inventory or product is essentially cash that is just sitting there. Naturally, the sooner you move your product, the quicker you have access to cash.

Negotiate with vendors and customers

Negotiation is a powerful tool. Especially when it comes to creating a positive cash flow. Now more than ever, vendors are more understanding when it comes to negotiating on terms that are a bit more flexible. It never hurts to negotiate with vendors and with customers as well. Plus, if you have a good relationship with vendors and have always paid them on time, they’ll be more likely to work with you.

Consider Financing

Every business, at some point, has to deal with low or thin cash flow. How they manage is important – especially when they need to cover payroll. One solution is payroll financing with Fingercheck. We offer financing options of up to $5,000* with no underwriting required. This can help small businesses make payroll every week – even when cash flow is thin (to secure instant funds) so they’re available in time for your weekly, biweekly, or monthly payroll. Payroll financing lets small business owners focus on long-term goals without worrying about which client check clears – and when.

*Financing is offered to current Fingercheck clients only (if they qualify) who have not had an ACH bounce due to NSF for a 6-month period. Financing over $5,000 will require underwriting. Infinity Capital Group provides financing. (Terms & Conditions Apply)