With jobless rates in the US slowly coming down
, it looks like the economy may be slowly improving. Soon, businesses might again be in the position to look forward to future growth. If the credit market remains tight, one way to free up the funds necessary for growth is to optimize cash flow. By delaying payments out as much as is prudent and finding additional ways to bring in payments, you can end up with more accessible money available. Here are some ways to improve cash flow:
Segment Cash Flow Sources
- Looking at cash flow as a whole can be daunting and unproductive, so you may want to look at different types of expenses separately to better determine where the problems may occur.
- The sooner that invoice is sent the sooner it will enter the client’s accounts payable process.
Encourage Partial Payments
- If cash flow is a problem, it may be possible to set up more frequent but smaller payments instead of one lump sum at the end of the month. This may be something worth looking into for both making and collecting payments.
Make Payments the Last Day Before a Late Fee
- If you have the money available to pay a bill on time, it usually makes little sense to pay the late fee if you can help it. If possible, set up the process so bills are paid as late as possible without incurring a fee in order to maximize the cash your business has available at any one time. Toffer Grant is PEX's Founder and CEO. He founded PEX in 2006 as a prepaid card solution for small businesses. His background in the prepaid industry began at Clarity Payment Solutions, where he initiated 65 prepaid card programs in consumer, corporate, and emerging verticals of the prepaid card industry.