Improve your cash flow and your business
Learn how to balance incoming and outgoing payments with the demands of your business.
Business cash flow – what you need to know
When cash is flowing in and out at a healthy rate, you’re poised to operate and grow your business successfully. Here’s what you need to know to take control:
- Know when to use your line of credit. Using a line of credit can increase your working capital and help you meet short-term and seasonal demands. (Tip: Avoid using your line of credit for long-term business purposes.)
- Payables and receivables. Optimize both payables and receivables to enhance the business cash flow. (Tip: Automated Clearing House (ACH) payments allow you to keep funds in your account for as long as possible while also giving control and stability of when the cash comes out of your account.)
- Borrow wisely. Credit cards can be used to make day-to-day purchases. (Tip: Pay off the balance before interest accrues.)
- HSA benefits. Employers that offer high deductible plans with HSA can drastically decrease the insurance premiums they pay and even lower the business' taxable income by making pre-tax contributions toward employee HSAs.
Insights to improve cash flow
Taking care of business
By implementing changes today you can improve your future cash flow and be better prepared for whatever opportunities and challenges arise.
Don't just go with the flow – make a plan
Here are some steps you can take today to improve the financial future of your business:
- Financial forecasting. Understand your business cash flow by completing basic forecasting calculations.
- Incentivize. Offer incentives to customers for using payment methods that benefit your needs. (Tip: Offering discounts for timely and reliable payment methods like credit card and recurring ACH payments can improve cash flow.)
- Assess accounts. Review accounts payable and ensure that vendor payment transactions are the most beneficial and efficient methods for keeping cash as long as possible and paying the lowest fees.
- Be transparent. Communicate with employees that handle incoming and outgoing funds, and ensure that everyone knows the financial goals and the current financial situation.
- Be prepared. Document your biggest threats and have a financial plan in place for how you would address challenges that could harm your business (e.g. strikes, natural disasters, nonpayments, etc.).