Improving Business Cash Flow

No matter how much you sell, if you don't collect the money, you're going to go out of business. You could be wrong to simply focus on total sales dollars; you also need to focus on the cash collection of those sales. Here are tips for improving your business cash flow:

1. Require a down payment on projects so that your customers fund the project, not you.
2. Set your terms to be payment in full upon completion. Don't extend out 30 or 60 days after you've completed your work. You don't get to use your hard-earned cash until payment is received from your clients, so get it as soon as you can.
3. Negotiate terms with your vendors for 30 days or more so you have an opportunity to complete the work, bill your customers and receive payments prior to paying your vendor.
4. Have a collection process in place, and follow through. When your customers delay payments, they're using your cash. You need to ensure that you're being diligent in collecting from your customers.
5. Set up a line of credit at your bank that you can use in case of emergency. Often, lenders rates will be less than the late fees your vendors will charge. This line of credit will help you cover a lapse in cash flow for short periods of time.
6. Minimize the amount of draws you take personally from your business. Each dollar you take from your company reduces the amount of cash flow you'll have available for the business to grow.