Improving cash flow today

Your cash flow consists of not only your sales, but your collections as well. An increased cash flow not only increases the value of your business, but it also provides financial security along with the opportunity to improve or introduce new products, hire needed help, and spend more money growing your business.

You can improve your cash flow today with some of the following options:

Collect your payments.
One way you can improve your cash flow quickly is to go after your collections. Most businesses have customers, whether they are other businesses or consumers, who are in collections. Nobody wants to get sent to a collection agency and have their credit harmed, and often the threat of it can get your collections to pay up. Even working out a payment plan with them will help you to improve your cash flow today.

Offer incentives/penalties
In order to get your customers to pay on time as well as improve your cash flow, implement late penalties if you don't already. This could be a set dollar amount (say, $25 late fee) or a certain percentage of the balance. Whether you are collecting late fees or getting paid on time, either way it will be an improvement for your cash flow.

At the same time, you can also offer incentives for people who pay their balance in full or who refer new customers to you and bring in new business. This will help improve your cash flow not only by collecting payments, but by attracting new customers as well. Your incentives don't even need to be monetary, which frees up even more cash.

Trim unnecessary expenses with a budget.
You can free up extra cash and improve your cash flow today by doing a budget and cutting down on extras you don't really need. All businesses should do a projected budget each year to determine where money is going and how much should be spent. If you don't have one, sit down and make one. You can do this using financial software such as Quicken or Microsoft Money, or you can use a simple Excel spreadsheet. Once you have made a budget, do your best to stick to it. This will improve your cash flow by helping curb unnecessary expenses.

Increase your prices
You can increase your prices occasionally, which is expected in keeping with inflation, demand, and so forth. If you are hesitant to do this, try it out for a little while and see the response you get. There is the potential you will lose a few customers, but keep in mind that if you do it correctly (don't increase prices more than 5% or at most 10%, for lower priced products and services) you will not lose customers and will increase cash flow today.

Do credit checks.
Do credit checks on your new customers. If their credit is bad, have them pay cash only instead of on credit. This will get more cash in your accounts quickly, and help you avoid the pain of collections by not offering credit to customers who have a spotty credit history.

Improving your cash flow is key to improving your overall business. These are just a few ideas for improving your cash flow today.