Tips on Improving Small Business Cash Flow in the Recession

Generally speaking, small businesses have little access to plenty of cash. Indeed, the small business cash flow is often described as feast-or-famine in nature. And the recession, which has affected small and big businesses alike, have made the famine part more visible.

Well, why go the way of the grim statistics when you can improve your cash flow with these few simple tips? Just remember that you have to be patient and determined while going about said changes as it will take time before you can enjoy the benefits.

Check Out Potential Customers

Of course, the more customers you have, the better for your expansion plans. However, you must carefully choose your customers lest you find yourself saddled with more accounts receivable than you can handle.

Thus, you need to check on the credit status of your potential credit customers. This way, you can easily weed out those people and organizations that may pose problems during collection time. Of course, this advice does not apply to cash customers for indeed you must welcome them with open arms if you wish to improve your small business cash flow.

Give Out Bills Promptly

Even when you have chosen your customers very carefully, you still need to exercise prudent collection methods. Basically, you have to bill as promptly as possible lest you find yourself unable to collect in time to make your own payments such as taxes and accounts payable to suppliers.

When giving out your billings, be sure to include leeway for mailing time. And always bill on paper since telephone conversations are not sufficient to prove that you have tried to collect.

Provide Incentives for Early Payment

Place yourself in the shoes of your customer. If you can avail of small percentage discounts for early payment, you will most probably take advantage of them since even small savings are big factors in the improvement of your small business cash flow.

For example, if you can offer a 2% discount for payment within 10 days instead of the usual 15 days, then you are providing for incentives for early payment. You save on costs for mailing and time for telephoning for collections. Besides, said discount may even be included in the total pricing so you still come out a winner.

Barter Goods

In these cash-strapped times, more and more individuals and organizations are going the old-fashioned way of bartering goods and services. After all, no cash per se is involved although you have to make sure that the bartered items are indeed commensurate in value.

However, keep in mind that your small business cash flow will still be affected in the sense that you still have to pay the taxes on the trade. But since tax time is still in a few months, you should be able to find the money for it.

Trim Your Inventory

Many small businesses make the mistake of hoarding inventory in the belief that it will pay off when the demand is higher and the supply is lower. In reality, you are at the losing end of this proposition simply because you are paying for storage and purchase costs that may not even be rewarded with a surge in sales later on.

You have many ways with which to improve your small business cash flow. Just set your mind to it and decisively implement the changes.

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"Tips on Improving Small Business Cash Flow in the Recession"

Check Out Potential Customers

Give Out Bills Promptly

Provide Incentives for Early Payment

Barter Goods

Trim Your Inventory