Get the Tools to Increase Your Small Business Cash Flow

The key to growing a successful small business is having enough cash on hand when you need it. A positive business cash flow is generated when your revenue from sales, account receivables and other deposits, exceeds expenditures to pay employees, bills, expenses, and debts. It allows you to meet all your business’ financial obligations while still having enough cash left to pay unexpected expenses or take advantage of new business opportunities. From managing your cash flow through online business banking tools to learning how to invest your extra cash, watch your bottom line grow with these cash management solutions and techniques.

Use cash flow management tools provided by your bank

The first step to increasing your business cash flow is getting a handle on your account management and billing habits. Most banking institutions offer a variety of cash management resources such as secure, online money management tools, automated payment options, paperless billing, and mobile business banking apps. These tools can help you get an overall picture of your business’ cash management practices and identify the areas that could be more streamlined to increase your business cash flow. Look into your bank’s business banking services and see what cash management solutions are available.

Consider a small business loan

Whether you’re expanding your small business or need some extra funds for equipment or inventory, taking out a small business loan can give you the cash you need to keep your business growing and running successfully.

Another borrowing option is a small business line of credit. A line of credit provides short-term financing with interest-only payments during the draw period to allow for a more flexible repayment of principal as inventory and accounts receivable are converted back to cash It’s also a perfect cash flow management solution for businesses that experience seasonal shifts in sales or staffing.

Increase your business cash flow by accepting credit cards

Being able to accept credit and debit cards is another great cash flow management solution. Most customers carry a credit or debit card, but may not have enough cash on hand to buy the good or service. Accepting credit and debit cards allows you to close a sale and receive payment immediately.

If your business is mobile or you want to avoid instituting a complicated POS system, new mobile phone applications make it possible to complete credit and debit transactions from virtually anywhere. The more ways your costumers have to pay, the more likely you are to increase sales, receive payments on time and increase your business cash flow.

Update your invoicing system

By automating your invoice system, you will not only save time, but invoices can be immediately sent to your customers and clients. This means faster transactions, faster payments and a faster increase in your cash flow.

They are plenty of options when it comes to business invoicing software and systems. However, they can be costly, and updating your invoicing system can also mean having to learn a new computer program, which can be time-consuming and difficult. One solution is to see if your bank offers an automated invoicing and payment deposit service. Having your invoicing and billing system directly tied to your other business checking and savings accounts makes it easy for you to manage your business cash flow.

Pay bills only when they’re due

Don’t pay your suppliers early. Instead, take the maximum amount of time you have to make the payments, which is usually sixty to ninety days. While you should always stay on top of your bills’ due dates and never pay late, paying too soon can lower and even deplete your business cash flow. Find out if your financial institution has an automatic bill pay solution. By scheduling your payments on the day they’re due, you can not only avoid making payments too early, but also ensure you make them on time. Paying bills late can mean having to pay penalties and fees, which won’t help your cash flow either.

Maximize your funds by earning interest

If you’re looking to grow a cash surplus, consider opening an interest-bearing checking or savings account, and investing your excess cash with automated sweep and investment services. Earning interest on your extra cash will not only increase your overall cash flow and buying power, but will mature your funds if you’re planning on expanding your business in the future.

An automated sweep service is a great cash management solution for those looking for a hands-off approach to maximizing excess cash. Provided by your bank, it is a daily service that automatically transfers surplus funds (based on a previously determined balance) into pre-selected bank accounts such as money market or business savings accounts. This way, you earn interest by investing your surplus, but maintain access to your cash if needed. Cash management techniques like this used in conjunction with the right financial tools can create a positive cash flow that will make it possible to expand your business and bottom line.

Sponsored content was created and provided by RBS Citizens Financial Group.