Vesta Digital Blog

3 Simple Ways to Increase Cash Flow

Posted on: March 16, 2011

3 Simple Ways to Increase Cash FlowAre you the type of person that has a tendency to procrastinate because you secretly love the thrill of getting things done on time? If so, you have probably experienced the stress and urgency of trying to establish some cash flow in your small business.

Cash flow

Cash flow is truly the lifeblood of your small business. Without it, your business will drown even if your income statements say you’re making a profit. Cash flow is defined as the relationship between revenue and expenses over a given period of time. Investorwords.com actually calls it “a measure of a company’s financial health.” Revenue is the money flowing into your business through sales of services or products, and expenses can be just about anything you spend money on to run your business.

Your primary objective as a small business owner is to make enough revenue (consistently) so that the revenue made is greater than expenses paid. This way, you begin to build up an overflow of money coming into your business. You need this overflow so you can have the ability to do anything from taking advantage of new opportunities to covering unexpected emergencies.

In order to avoid a cash flow crisis, use the tips below to build up your cash overflow and enjoy your growing business.

Cash overflow

1. Always receive payment upon delivery

Many small businesses allow customers to enjoy first and pay later. The fact is, if you want to see your cash flow remain consistent and steady, you can’t afford to do this. Credit is for banks and large corporations, not your small business. If it’s realistic, always ask for a one-time payment in advance of your services. If your product or service is delivered over a period of time, request payment in advance of each delivery. You should offer some sort of discount for paying more up front rather than over a period of time.

2. Pay every bill on time

Nothing but common sense here, you’ll save money by avoiding late payment charges and you can often take advantage of payment discounts for early payments.

3. Have a product that makes you money more than once

By creating something that you can sell multiple copies of (like an e-book) can be extremely beneficial and cost effective. Having a business website where you can sell your products is also extremely beneficial and can save you a lot of time, money, and effort by reducing many costs.

Distributed by IntelBuilder Social Media Platform

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