How to improve your business cash flow

Graphic design image of cash with arrows indicating cash flow and the words, "Cash flow is a universally important concern. no matter your industry or market."

Cash flow is a universally important concern, no matter your industry or market. A steady stream of funds is vital for paying bills, taxes and employees, not to mention addressing potential emergencies and generally operating as a dependable, resilient business. An irregular cash flow can cause some serious problems for your short- and long-term operations, so it's important to recognize your options for stabilizing and improving it when necessary. Let's look at a few effective options for improving your cash flow.

Make small, effective changes

The best part about these strategic alterations to your business operations is that they carry little or no additional costs. While these improvements often aren't enough to repair a weak or irregular cash flow in the short term, they help strengthen your operations in the long term. Investopedia offered a variety of options for improving cash flow, including prompt sending of invoices, reasonably increasing prices and negotiating with suppliers and vendors. Not all of these strategies will work for you - and some have drawbacks when viewed outside of the strict context of improving cash flow - but you will likely find a few that are a good fit for your specific operational needs.

Another suggestion made by Investopedia is finding a high-interest savings account to passively increase cash flow. This strategy doesn't lead to a massive, immediate influx of cash, but it does maximize the return you receive for doing nothing beyond making a deposit into a savings account. TAB Bank offers a Business Money Market Account that functions very similarly to a savings account while providing a competitive interest rate.

A strong strategy for tracking accounts receivable and collecting on them is also vital. Making this kind of change can be somewhat more transformative than many of the previously outlined suggestions, but it's often worth it. If your business doesn't view accounts receivable with urgency and doesn't hold debtors accountable, it's far more difficult to reliably collect on outstanding debt. Just as your business should strive to pay bills on a regular schedule, it should expect the same from the companies it works with.

Know when to turn to A/R financing and similar options

Sometimes, businesses need a quick influx of cash to stabilize operations or take advantage of a time-sensitive growth opportunity. Whether it's an unpredictable and costly emergency or a rare chance to spend now for a strong, long-term improvement, your company can only respond if it has the available cash on hand to do so. In these situations, many business leaders will start to consider various forms of financing, and, in more extreme situations, selling off existing assets or dipping into personal finances to fund such needs.

Accounts receivable financing offers a straightforward and adaptable option to improve cash flow and address any number of opportunities and emergencies. You simply use existing, unpaid accounts receivable invoices as collateral for a line of credit. There's no need to use mission-critical business or personal assets to secure this funding - the only asset involved is bills your customers haven't yet paid. This approach to acquiring funding and stabilizing cash flow can prove to be far more manageable than would large loan or other financing options that can come with much higher stakes.

Of course, the availability of A/R financing isn't the only consideration you need to make as you choose a dependable, trustworthy partner to provide this key resource. A great financial institution doesn't just provide A/R financing and similar options, it's ready to work with your business as part of a more holistic effort to ensure your operational stability and position you for success.

In addition to clear, easy-to-understand A/R financing options, TAB Bank emphasizes a strong relationship with all our partners. We offer a dedicated relationship manager for each account as well as credit analysis and collections management to make A/R financing as effective as possible. To learn more, get in touch with us today!

About the Author

Justin Gordon

Justin joined TAB Bank in 1999 in a sales capacity and soon became the bank’s National Sales Director providing direction for TAB’s business development efforts and supervising TAB’s inside and outside sales teams. Justin has over 20 years of experience in providing leveraged asset-based lending and factoring credit facilities to small and middle-market companies from a wide array of industries. During his tenure at TAB, he has successfully developed and managed regional and national sales origination teams. As a results-oriented strategic leader, he has developed a track record of driving incremental revenue growth as well as maximizing total profitability contributions while maintaining exceptional client relationships and minimizing risk. He is a graduate of the Graduate School of Banking at the University of Wisconsin –Madison where he also completed the Executive Leadership Certificate from the Wisconsin School of Business.

As Senior Vice President for Sales and Marketing, Justin provides leadership and direction for the bank’s revenue growth, business development, and marketing strategies.

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