How to Improve Your Business’ Cash Flow

Pay attention to your cash inflow and outflow for real savings

97491751The Ins and Outs of Cash Flow
There are two aspects to cash flow: inflows and outflows. We spend a lot of time as businesspeople thinking about how we can improve the amount of cash coming into our business but we don’t spend as much time thinking about the outflow portion of the equation.  One of the best things you can do to improve the cash outflow of your business is to cultivate a culture of savings.

Create a Corporate Culture of Savings
If the boss watches every penny then the employees will too. I have a friend that runs a business that does over $500,000,000 a year in sales. He started the business 25 years ago from his garage and his company has never lost the culture of cost savings to improve business cash flow, like a startup.

Corporate culture starts from the top. Employees take cues from their leadership team to determine what the company values. If a business owner watches every penny, then employees will do the same. If a business owner is wasteful when it comes to expenses that make his life easier, then employees will do the same. To this day my friend approves every expense of his company. This may seem like a waste of his time but it has instilled a culture of cost savings in his business that is now one of the company’s core values.

On the inflow side of the equation one the easiest things you can do to improve the level of cash coming into your business is to leverage the assets your company already has.

Leverage the Assets You Already Have
Services companies dominate the current U.S. economy.  If you own a service company, chances are the biggest assets your firm has are its outstanding invoices, or accounts receivable. If you need to increase your business cash flow to meet payroll or initiate  growth or a new sales strategy, then invoice factoring is a great tool. Factoring works so well because you are tapping into an asset you already have: your unpaid outstanding invoices.,

If you could have all your outstanding invoices paid tomorrow, how would you use the money generated from increased business cash flow?

  • Make payroll
  • Purchase inventory
  • Hire new salespeople
  • Take advantage of discounts available from vendors

If you have decided you want to get cash for your outstanding invoices today, rather than waiting, here are my suggestions for what you should look for when selecting a financing partner to improve your business cash flow.

Top three things you should look for in a factoring company:

  • Free application process – Any finance company that focuses on small businesses should be able to invest the time to do an initial screen/review to see if your companies will be a mutual fit.  If you’re asked for an application fee, be wary of other fees that may emerge over time.
  • Ability to transact over the Web/email – In today’s age, the ability to run a business 100% paperless has arrived. You should find a factoring company that understands the 21st century technology advances, and how they can make your life easier.
  • Transparency – Make sure you ask prospective factoring companies how they charge their fees, how you can view all the transactions on your account, and if there are any long-term commitments.  Again, be a good listener while you ask these questions as their answers may provide clues as to how the company will interact with you in the future (e.g. good client service).

To learn more about how Fast A/R Funding can increase your business cash flow, call one of our cash flow consultants at 888.833.2286 or fill out the form to the right.