Cash flow is one of the primary attributes that aid in acquiring loans for your business; it doesn’t matter how profitable you are on paper if you don’t have much cash flow on hand. Insufficient working capital is one of the primary reasons that small businesses falter; sustained negative cash flow, basically, is a death knell for a company. In the article to follow, you will learn the basics of how to attain and improve your positive cash flow.

Increase Your Sales

Frankly, as obvious as this is, so few businesses understand the utility of going out there to get more customers – just because your business is profitable on paper doesn’t mean that it is healthy if cash flow is low or negative. In fact, for a better return-on-investment, sell more products/services to preexisting customers rather than try to corral new ones – the former is less expensive. Enact pricing discounts to see if this is profitable, for example.

Accounts Receivable Can Improve Cash Flow

In particular, you should be trying to collect your receivables, in this case. Discounts can help here, as well, to help expedite payment or to encourage clients to employ payment methods that pay faster. For example, depository check transfers are cheaper and faster than most other methods, and if your customers agree to preauthorize checks (again, a discount can entice them to do so), the bank will be able to draw the money faster.

Take Advantage of Amortized Loans

Such loans help rectify your cash flow problems by holding interest payments in abeyance for a specified time, so that you aren’t losing money paying back the loan even as you solve your short-term cash flow issues. Other types of helpful loans can come from the Small Business Administration of the federal government (SBA).

To determine whether or not you currently have a cash flow problem, or can expect to have one down the road, determine your expected balance half a year from today. If it is negative or barely positive, employ some of the methods above as a start. 

Contact KPI today to learn more about cash flow solutions for your business.