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Increasing cash flow is a popular subject among business owners, and for good reason. Lack of positive cash flow can lead your business down the wrong path.  Try typing increasing cash flow into Google search engine and you will see just how popular cash flow is to business owners, with over 15,400,000 entries.  Creating positive cash flow is about collecting more money (from goods and services) than goes out in expenses, and by holding on to your money for the longest time possible.

Step One: Inventory

If you have a business that requires storage of inventory, look closely.  Excessive inventory collecting dust may be costing you positive cash flow.  Examine your monthly product sales and future projected product sales.  Store just enough inventory to accommodate customers, no more.

Step Two: Payments

Ensure that all payments are received promptly.  If your service is spread out over time, i.e. a home remodeling company, ask for a partial payment (or deposit) upfront.  Offer your customers a “fast pay” discount.  Deposit all checks as soon as you receive them.  Take a look at your merchant account.  How long does it take to receive funds from your credit card sales?  If it takes longer than 24 hours, call your merchant account provider and request next day funding.  The quicker you have credit card money in your account the faster cash flow is increased.  Check out www.paymentmax.com for more information on next day funding.

Step Three: Billing

Bill your customers right away.  Keep up with outstanding bills.  The longer the bill remains unpaid the more likely you will not receive payment in full.  Require credit checks if unpaid invoices become an issue.

On the other hand, when it comes to your businesses bills, pay bills on the due date.  Don’t pay bills sooner, hold on to your money.  Know which companies require payment first and prioritize. Protect your credit.

Step Four: Fixed Costs

Business owners should be looking at their fixed costs routinely and evaluating ways to reduce those costs.  Fixed costs such as utilities, rent, and other business-related services may be reduced by simple awareness.  Lower your energy bill by only lighting half the building.  Decrease services, for example why pay for five phone lines, when you really only use two.  Negotiate leases and shop around.  Don’t pay more for a good location if it is not important to your business.

Step Five:  Purchasing

There may be cash flow in your purchasing power.  Shop suppliers and check pricing and payment terms.  You may find those suppliers with flexible payment terms more valuable than the supplier with slightly lower product costs.  Resist buying all of your products from one supplier simply out of convenience.  You may be paying higher prices for certain specialty products.  Resist overbuying.

Step Six:  Pricing

Routinely look at pricing of your product or service.  Are your prices comparable to competitors?  Customers expect small price increases from time-to-time.  If your prices have not increased for a while you may need to assess your pricing structure.  A simple price increase could create the positive cash flow needed for your company.

Taking steps to create a positive cash flow can help your business by providing a pool of disposable money needed to grow your business.  Keep your business’ money accessible for growth by collecting from your customers’ quick and paying out for expenses slow, but not too slow.