Seven Strategies to Improve Cash Flow for Your Small Business

Original content provided by BDO Australia.

Managing cash flow is one of the largest issues business owners face and in the current economic climate, cash flow management is more critical than ever. Many business owners do not attempt to create a cash flow forecast because they feel it is impossible to predict the unpredictable.

To solve this problem, It is important to understand the seven simple strategies to help stretch and improve the amount of cash available for your small business. There are three ways you can increase the amount of cash flowing into your business and four options for reducing the amount of cash flowing out.

How to increase the amount of cash flowing in:

  • Pricing - lift your prices, focus on profitable revenue streams and provide more value
  • Volume - increase your customers, expand into new markets or develop new products/services
  • Accounts receivable - invoice earlier, follow up frequently and reduce payment terms.

How to decrease cash flowing out:

  • Expenses - reduce your overheads, identify and reduce discretionary spend
  • Assets - consider what can be converted to cash, sell underutilised assets or leaseback
  • Human resources - match staffing levels to demand, change staff mix and reduce turnover
  • Inventory - reduce costs, improve terms with suppliers and clear slow-moving stock.

Cash in strategies

Cash out strategies

Managing cash flow is a critical issue for most business owners. BDO can assist with calculating your cash position and can provide strategies to preserve and stretch your cash flow further.

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