“7 Ways To Cash Flow While Keeping Your Customers” 

Small Business Oxygen



“Do you think your business would have been better if you saved a fraction of your cash flow from the start?”

You’d say yes, wouldn’t you? It’s really as simple as that.

As a profitability coach in Houston, that’s exactly how I help business owners. I help them improve their cash flow from areas they didn’t think about.

People care more about answers than questions. As a Houston business coach, I’d like to focus on better questions.

Today, I want to talk to you about 7 ways to boost your cash flow.

business-coaching-houston-cash-flow-boost



1) Create liquidity reports

Most small businesses use some form of bookkeeping. Yet, it surprised me to see some didn’t even have a tool to store their transactions. That makes it harder to sell the business when the time comes. 

If you use QuickBooks online, it will let you compare how you did last year against this year. You can then see your liquidity ratios–current, quick and debt. These tell the story when you compare it to your industry. It tells you how you repaid debt and how you increase cash. Note that having better cash flow is not the same as having better profit.


2) Extend accounts payable

Businesses buy raw materials as soon as they sell goods. Then it takes time to add value to these goods before shipping them to the customer. This lag is known as Work-in-Progress or WIP. 

Easiest way to ease cash crunch in business is to pay sellers in 45 or 60 days. 


3) Shorten accounts receivable

Conversely, shorten the receivable days to about 20. Your customers will now pay you sooner. This will increase cash in your business.


4) Shorten inventory days

Keeping inventory on the shelf takes up cash. So buy inventory just in time to build goods. That way they have the shortest shelf stay.


5) Renegotiate longer terms

Negotiate terms first with non-critical sellers. Because some goods don’t sell as much, it might be better to work with such sellers for these items. Stretch the terms. Keep alternatives on multiple sellers.


6) De-select customers

Review the list of best customers. For the remaining ones, set up shorter payment terms. It will give you an idea if they’ll stay despite your new agreement. If they don’t, let them go. You now have a sharper list of top customers you’d like to do business with. It forms a better strategy going forward.


7) Outsource collection

If you can’t give bonuses to your accounts receivable team, then by all means use a collection agency. The investment will soon pay off in more cash for your business.

These 7 steps will help you boost your cash flow quickly. 

Want even faster results? Are you ready to discover how? Call 281.410.5375 to grow your small business.

Written by Suresh Iyengar, P.E., President, Business Unit Execution LLC––“Explosive Business Coaching Houston Results For Small Business”. Want even faster results? Are you ready to discover how? Call 281.410.5375 and speak to your Profitability Coach Houston


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