Boost Your Company’s Cash Flow With These 5 Strategies

More than three-quarters of all Americans live paycheck to paycheck.

Likewise, many small businesses live transaction to transaction. Is yours among them?

If boosting cash flow were easy, business owners wouldn’t spend night after sleepless night agonizing over how to do it. Every company is different, after all, and the liquidity-enhancing strategies that bolster yours might mean nothing to your neighbor’s.

That’s not to say you should quit trying. These five approaches have all been proven to boost business cash flow under the right circumstances. You owe it to yourself to give them a try — and to know when it’s time to move on should they fail to pan out.

1. Use a Payment Processing Solution That Offers Rapid Settlement

Why wait for your money? Use a payment gateway that gets your cash where it belongs — your bank account — as quickly as possible. Same-day funding is increasingly common, though not all merchants will qualify.

2. Invoice Right Away

Don’t wait weeks or months to invoice for services rendered. Make it clear to your customers that they’ll see your invoices right away. Use a cloud accounting platform to keep on top of the process and ensure that they can’t use the old “buried in my inbox” excuse. And build tight A/R timelines into your invoices’ fine print; net 10 should be doable for most customers.

3. Stay Asset-Light

Why buy when you can lease?

For expensive, depreciable equipment like vehicles and machinery, leasing is easier on your business’s bank account. According to U.S. News and World Report, car lease payments are almost always lower than car loan payments — and fleet discounts can further reduce your out-of-pocket costs. Of course, you have to return your leased vehicle at some point, and you’ll need to adhere to mileage restrictions or pay hefty penalties. Unless you plan to run your company’s fleet into the ground, that shouldn’t really be an issue.

4. Regularly Negotiate With Suppliers and Service Providers

Remember: You don’t know until you ask.

Your suppliers aren’t pushovers, and you shouldn’t expect them to be. That said, you can and should expect them to reward long, fruitful business relationships with lower pricing and more favorable payment terms.

Also: If possible, avoid long, multi-year contracts that lock you into inflexible pricing schemes; make it clear to those with whom you do business that you expect to re-examine arrangements on a regular basis. Shaving even a couple percentage points off your contract costs can make a big difference when margins are tight.

5. Learn to Love the Subscription Model

Monthly recurring revenue is all the rage right now. Even if your product or service mix isn’t a natural fit for a subscription model, you can probably figure out how to inject some stability into your cash flow picture with value-added plans or packages that lock your customers into medium- to long-range relationships. As long as you keep delivering, they’ll keep paying.