If you're a business owner, you're well-acquainted with cash flow and how it affects your company. Not only is it a good indicator of performance, but it can also help you make decisions, plans, and gives you a good idea of when it may be time to expand your company.

1. Leasing vs Buying

Depending on the industry, the option to buy or lease can extend to a variety of circumstances. Many companies have to utilize machines, vehicles, buildings, and more to keep their business running. However, many of these tools for success can be leased instead of purchased. You may be wondering why that's a better option. Simply put, lease payments are significantly less than financing payments. If you're paying less per month, you have less cash flowing out which could help better balance the numbers. Though there are circumstances where buying makes more sense, leasing is the best option when cash flow is a problem.

2. Early Payment Discounts

There are always those clients who don't pay their invoices on time, potentially causing cash flow issues within your company. One simple way to combat this is by offering your clients an early payment discount. This not only allows them to pay a percentage less than what they would have otherwise, but it also encourages more time-appropriate payments. An early payment discount typically averages around 2%, which can be valuable for your clients without being a hit for your company.

3. Improve Inventory

Inventory is a numbers game, and it pays to win. When purchasing products, you want to make sure the items are getting used so you're not spending hundreds or thousands of dollars on an inventory that isn't used as frequently as you originally thought. Staying in touch with the reality of your inventory needs can keep you from making unnecessary purchases and potentially creating more of a cash flow problem.

4. Prompt Invoicing

Significantly delayed invoicing can be frustrating for all involved, and you may be creating a cash flow issue for both you and your client. To prevent this, we recommend making sure your invoicing is prompt. This eliminates confusion for your client and also increases your cash flow as you receive money much sooner than if you waited to invoice.

5. Electronic Payments

We can thank the 21^st century for easy access to electronic payments. When receiving checks through the mail, it can seriously stunt cash flow as you anxiously wait for that cash to come through. Electronic payments, on the other hand, make it easy for your client to pay and allows the payment to hit your account much sooner than it would have otherwise. Accessibility and efficiency are key.

If you're struggling with cash flows problems, we hope that this gives you some good options for ways to promote positive cash flow. We would love to help you develop a more thorough plan of action. Contact us today to learn how we can help you with cash flow.