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Tips for Small Business Cash Flow Management

Tips for Small Business Cash Flow Management

| May 01, 2024

Even if you have a brilliant idea to serve customers in unique ways or to fill a niche, when you neglect to effectively manage your small business cash flow, you’re asking for trouble. 

Especially for early startups, knowing exactly how much cash is coming in and going out, and precisely forecasting sales and expenses, is pivotal to maintaining your company’s financial health.

At Horizon Planning Group, one of our specialized financial planning services is helping you manage your cash flow effectively. Let’s take a look at some easy ways you can keep your small business cash flow moving.

1. Raise Your Prices

This first one’s a no-brainer. Among other small business financial problems, I’ve noticed that business owners often find it frightening to raise their prices because they’re afraid it could result in lower sales. However, it’s okay to test several price points to find the perfect number. There’s no way to tell how high your customers are willing to go until you try.

2. Pay Digitally

All business owners have bills to pay. If you pay them digitally, you can wait until the morning of the day your bill is due to make a payment, increasing your cash flow. 

Another digital option is using a business credit card. Some credit card companies offer a 21-day grace period, so you could pay your bills when they’re due and then take advantage of the grace period to improve your cash flow.

3. Perform Credit Checks on Customers

Run a credit check on any customer who doesn’t want to pay you in cash. If a customer has bad credit, you can assume you won’t be receiving payments on time. Even if you really want to close the deal, your company’s cash flow could suffer from the late payments. 

4. Lease Equipment and Supplies

Most business owners know that buying is cheaper than leasing. So this tip might seem counterintuitive. But to improve small business cash flow, leasing is better than buying because the smaller payments help free up cash. And unless your company is flush with cash, you’ll want to sustain a steady cash stream for daily operations.

5. Put Your Money in High-Yield Savings Accounts

The best high-yield savings accounts offer interest rates that are significantly higher than the national average, meaning you’ll earn more on the money you’ve stashed away. This can provide your company with cash liquidity.

6. Refine Your Inventory

Make a list of the stock you buy that isn’t moving at the same pace as your other products. Those sluggish products tie up a lot of cash and could reduce your cash flow. So instead of buying more of what doesn’t sell, get rid of what you do have. Increased demand for that product isn’t likely—and increasing your cash flow is a smarter move.

7. Give Early Payment Discounts 

Everyone enjoys a good incentive, so by giving your clients a discount for paying their bills on time, you’re offering an opportunity for both of you to win. And, of course, receiving the payment early improves your cash flow.

8. Submit Invoices Right Away

In addition to sending out invoices immediately, your invoices should have clear terms and be simple to read. The due date should be mentioned several times (ideally in bold). Also, give precise instructions about the allowed payment methods and late-payment fees. Remember, the bottom line is to increase your cash flow, and sending out timely, no-nonsense invoices is a pivotal step.

9. Set Up Discounts With Your Suppliers

You’ll be in a better position to negotiate payment terms with suppliers if you maintain an ongoing, friendly relationship. If your suppliers are willing, pay your bills early in exchange for a discount. Setting up favorable arrangements with your suppliers is a key part of small business cash flow improvement.

10. Consider Creating a Buying Cooperative

You could take your negotiation skills to the next level by partnering with other like-minded companies willing to pool their cash as leverage for bartering lower prices with suppliers. Some suppliers give large discounts to firms who buy in bulk.

Partner With a Trusted Professional

Whether you’re concerned about your small business cash flow or another financial planning strategy, we’re here to help.

Our team is fully committed to putting your needs first. Our work is guided by principles of honesty, trust, and respect. We provide the services that help you most—not the ones that pay us the most.

When you’re ready to utilize professional knowledge and experience, you can schedule an introductory meeting online  or reach out to me at (770) 627-4157 or Garrett@MyHorizonPG.com

About Garrett

Garrett L. Holcombe is president at Horizon Planning Group, a full-service financial planning team committed to always doing what’s right for their clients. With over a decade of experience, Garrett specializes in serving small business owners, giving them a step-by-step process to help them overcome the challenges they face every day and take advantage of the opportunities available to them. His vast knowledge and dedication to his clients allows him to tailor a plan to his clients’ needs and goals, whether that’s creating a start-up plan, financing and tax strategies, employee benefits, and more—all so that his business owner clients can experience confidence in their financial future. Garrett is known for his passion for education. He takes on the role of a teacher so he can help his clients feel empowered about their decisions and understand their financial situation thoroughly. He wants his clients to know that he’s always there for them, no matter what their questions or concerns are, and is always working behind the scenes to keep your plan moving forward. 

Garrett graduated from Kennesaw State University with a bachelor’s degree in political science and is a CERTIFIED FINANCIAL PLANNER™ professional. When he’s not serving his clients, Garrett loves spending time with his wife, Amber, and their two children, Samantha and Matthew. Garrett and Amber were one of the first foster homes with Goshen Homes, a foster care agency of Goshen Valley that specializes in keeping siblings together. They adopted their children through the foster care program. Garrett is heavily involved in his community, serving as an adult leader and the safety and training officer for Sea Scout Ship Southwinds 100, and is president of the Cherokee High School Band of Warriors Booster Club. He is part of the Woodstock Business Cub and an active member of his church. In his downtime, he loves cheering for the Braves and Georgia Bulldogs and is an avid Liverpool Football Club and Atlanta United fan. To learn more about Garrett, connect with him on LinkedIn.

This is for educational and informational purposes only and is not research or a recommendation regarding any security or investment strategy. 

The information given herein is taken from sources that IFP Advisors, LLC, dba Independent Financial Partners (IFP), IFP Securities LLC, dba Independent Financial Partners (IFP), and its advisors believe to be reliable, but it is not guaranteed by us as to accuracy or completeness. This is for informational purposes only and in no event should be construed as an offer to sell or solicitation of an offer to buy any securities or products. Please consult your tax and/or legal advisor before implementing any tax and/or legal related strategies mentioned in this publication as IFP does not provide tax and/or legal advice. Opinions expressed are subject to change without notice and do not take into account the particular investment objectives, financial situation, or needs of individual investors. This report may not be reproduced, distributed, or published by any person for any purpose without IFP’s express prior written consent.

Securities offered through IFP Securities, LLC, dba Independent Financial Partners (IFP), member FINRA/SIPC. Investment advice offered through IFP Advisors, LLC, dba Independent Financial Partners (IFP), a Registered Investment Advisor. IFP and Horizon Planning Group, Inc. are not affiliated. 

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™, and CFP® (with plaque design) in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.