Steps to maximize the cash flow of your business

Written By Steps To Faculty Published September 17th, 2010

Starting your own business during these rough economic waters means you need to make every penny count. Maximizing your cash flow can mean the difference between being in business and not being in business. Cash flow is what makes your business operate (i.e., to pay bills, employees, expand). Take a look at what you can do to maximize cash flow.

Step 1 Get money when you don’t need it

It is a commonly known fact that banks and credit unions do not extend loans or lines of credit to struggling business or to those who are starting their own business. Hence, apply for a loan or a line of credit when your business is flourishing and is profitable. You will have no trouble securing such funding and you can invest this money into a liquid instrument with a return on investment that matches or is slightly higher than inflation and does not require high level of taxes, such as a T-bill to cover your expenses when your business is not as profitable.

Step 2 Check for highs and lows

Every business has a period of seasonality when the business is busy and doing well at some times of the year and slacks off at other times of the year. Plan ahead for the down time. For example, a pizza store does well in the fall and on national observances, such as the Super Bowl. During summer months, pizza does not do as well even though there is some business. Look at the seasonality of your business and plan accordingly.

Step 3 Save for major purchases

If you realize that you will have to replace equipment in a year, then save for it from now. Look around for deals so that you can get good equipment without having to bust the budget.

Step 4 Manage receivables

Constantly remind customers of their past due status every 30 days via telephone. In fact, at the time of purchase, you should consider an arrangement of paying a little per week or per month if the customer seems financially shaky. By doing so, you will still get back your money over time without having the hassle of fees for using a collection agency.

Step 5 Make every dollar count

Spend every business dollar wisely. For example, develop advertising campaigns that actually work and will sell you product. Pay all payables on time to avoid extra fees and charges. Negotiate with your bank about overdraft protection to avoid bouncing checks. Negotiate with credit card companies to pay more than the monthly fee to reduce any balances quickly. Stretch each dollar to maximize your cash flow.

Remember, having a positive cash flow means your business is solvent and will continue to thrive. Please visit stepsto.com for more great business advice.


Roger Due

Investing in Your Destiny® & Coaching Program - Wealth Building Summit Dallas, Texas

My name is Roger Due and I am from Albuquerque, New Mexico and I am the owner of the Monsano software company. This has been an absolutely fantastic conference. This is the best I have ever been to.