Managing a business’ cash flow well is the primary challenge facing every business owner. At some point in time, you might consider a bank loan. However, before you take that step, here are three ways you can free up your cash flow before considering external financing options.
- Get Paid Faster
Waiting around for invoices to be paid does nothing to help your cash flow situation, so a sure-fire way to accelerate payments is to revise your invoicing payment terms.
Invoice your customers as soon as you are practically able to do so. Additionally, check the actual payment terms on your invoices. Consider revizing those terms to have a short payment period as well as implement practical consequences for non-payment, such as non-delivery or recovery of goods.
- Review Your Payment Methods
Some payment methods can take longer than others. While checks may be a traditional means of doing business, they can also take up to three business days to clear.
Therefore, depending on the nature of your business, it’s in your own interest to encourage the use of fast payment methods such as cash, electronic funds transfer and payment cards. The last has the added benefit of giving you next-day receipt of cleared funds, without the hassle of creating and generating invoices.
- Invest in Accounting Software
When running a business, the paperwork itself can be mountainous. An effective accounting software service can easily tell you where there are redundancies and inefficiencies and help you anticipate future cash-flow problems. Spare yourself the hassle of manually processing your paperwork and save time by investing in a powerful accounting software instead.
QuickBooks Online, for example, allows you to track invoices and payments, identify trends and concerns as well as generate invoices, cash flow statements, charts and information to assist you at tax time. Using QuickBooks will also give you an instant snapshot of where your business is spending or losing money and has the potential to grow. Moreover, you’ll be able to access the information on any computer device you like.
There are many ways for a business owner to accelerate payments to ensure that you can make the most out of your cash flow. With these few simple strategies, you’ll have more money to inject into your business or invest in growth.