10 simple ways to develop positive cash flow - part one

While it's an attractive offer for customers to offer credit terms, it can often complicate the payment process, and with it, your cash flow.

Remember, in order to generate positive cash flow it's vital you get paid on time otherwise you may be forced to watch the untimely end of your business.

But maintaining cash flow can be hard, especially when you're not a financial expert and don't have an accountant.

Here are the first five of 10 simple tips from Startup Nation to help your business generate a positive cash flow.

1. Try to get all or a portion of payment up front

As we mentioned credit terms can be valuable to your business because they generate interest from a new group of customers previously unavailable to afford an upfront payment. The problem is deciding your terms and getting your customers to pay on time. There's no point generating new customers if they aren't going to be able to pay their invoice. That's why it is essential that you try to get as much payment as you can, even if it is a deposit or down payment, in the initial transaction. This way you confirm that there is at least some cash entering your business.

2. Sign up for a merchant account

If you operate a business today it makes sense to have a merchant account. Customers today are accustomed to making payments on card and it allows for a quick and speedy cash injection to your business. Merchant accounts do have fees associated but the convenience for customers means they are more likely to pay if you have this option available.

3. Pay your bills at their deadline

Just because you have the money available to pay a bill when it first becomes available doesn't mean you should. You should always make payments with the future in mind, and by delaying your payment to deadline day you will have a better understanding of your cash flow status.

4. Manage accounts receivables closely

If you offer credit terms to your customers you should always stay on top of your credit sales and have a clear understanding of when you are owed money. The best way to do this is by creating an "aging" template in excel that highlights payments as they become due allowing you to follow up money owed in a prompt and timely fashion. If you feel out of depth trying to manage your accounts receivables here are some tips to help you stay on top of them.

5. Create a cash inflow/outflow budget

One way to keep a basic track of your cash status is by noting all payables and receivables and what dates they are due. This won't always be 100% accurate but it will give you a fairly good indication of how much money you owe and the amount of funds available when your payments fall due.

Next time we'll look at another five simple steps you can use to help keep on top of the cash flow equation.

Want more information?

Dun and Bradstreet - Guide to Cash Flow and Credit Risk

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