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Better Cash Flow – 11 Ways Small Businesses Conserve Cash

Written by: Merra Lee Moffitt

Article Overview: Let’s talk about better cash flow – how to hold onto and conserve the cash you have on hand. This is not about cutting expenses. This is about holding onto your cash for as long as possible.

Better Cash Flow – 11 Ways Small Businesses Conserve Cash

Let's talk about better cash flow - how to hold onto and conserve the cash you have on hand. This is not about cutting expenses; see my article "Cutting Costs Now: 9 Hot Areas for Creative Small Business Owners". This is about holding onto your cash for as long as possible. For ways to collect cash faster, see my article "14 Ways to Collect Cash Faster". Better cash flow can be achieved if you:

1. Barter. Small businesses find that trading for goods and services will not only conserve cash; but also can substitute for borrowing and rack up savings. You don't have to find a company to trade directly with; just join a barter network. Joining a group such as Corporate Barter Network gives you hundreds of local businesses and thousands nationally. In addition, they open your account with a credit so you can get started if there is something you need before someone else buys from you.
2. Ask for credit terms. Many bills can be paid in 30 days. But be sure you pay on time or your credit agreement could be removed. You want to keep that relationship on an even keel as well as avoid late payment charges.
3. Pay when bills are due, and not before. To save time, you can write your checks every week, but don't mail them until two or three days before they are due. The time frame depends on the mail delay.
4. Create a forecast of incoming and outgoing cash expected for the next three months. Continue to forecast your cash flow monthly to ensure that expenses and planned expenditures are in line with accounts receivable. Avoid using your credit line if you can.
5. Create a 30-day wish list before committing any new spending. If there is something you think your business needs and it is NOT directly related to delivery for a customer, pause before buying. You'll get better cash flow by slowing your spending decisions.
6. Remove discretionary spending authority. If anyone besides you makes purchase decisions, say your spouse or your assistant or a partner, agree that nothing will be purchased before specifically discussing it. This may seem like a small thing especially if we're talking about postage or office supplies, but can conserve cash and possibly reduce spending.
7. Create a self-imposed moratorium on new spending. Unless you can find something else of equal value to remove or suspend. This exercise will help you rethink if the new item is going to provide enough value to supplant something else. For example, if you want to add a marketing campaign which costs $100 a month you might find a way to cut your telecom costs by $100 a month.
8. Cut Inventory. Think you don't have any inventory if you are a service business; what about office supplies? Buying just what you need for the moment, conserves cash and keeps the employees and yourself from taking them home for needs there.
9. Buy Used. Furniture Soup here in Reading sells previously enjoyed furniture at dramatically discounted prices. Other items typically available used include books.
10. Re-negotiate with your suppliers, lenders, and landlord. You value these relationships and so do they. Ask if there is anything you can do to pay on a slower schedule, remove travel charges (hey, gas is down 50%), or reduce shipping charges.
11. Implement a cost cutting program with a top 3 list. For a simple system, see my article "A Cunning Cost Cutting System for the Busy Business Owner". This way you'll consistently cut costs without losing focus on building your customer base and keeping up revenues.

So summing up, better cash flow comes from spending less, spending slower and speeding income. See my article "Does Your Client Pay Slow?"for more on speeding income. Give me comments below. What's happening with your cash flow?

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Article Tags: article 14, barter network, cash flow, checks, decisions, even keel, expenditures, joining a group, li li, local businesses, mail, ol type, payment charges, relationship, small business owners, small businesses, three months, time frame, wish list



Related Forum Posts
Re: Improving Cash Flow - Thanks for your information. guide on how to avoid the problems of over trading. <-- Where is this guide? Any URL? guide on debt factoring and invoice discounting: the basics. <-- Where is this guide? Any URL? I just want to learn more about this. I am also looking for a good article on: What exactly is Cash Flow? Ways to improve cash flow at individual level and organizational level? I think it is a problem of thinking and mind sets problem. If we can change the way of spending, we can have more Cash. Robert
Improving Cash Flow - How do I improving Cash Flow? What the best way to improve it to another 100% growth YOY? Has anyone does this or achieved this using online marketing? Thanks, Roberts
Re: Apologizing for my absence, and an update... - Apology accepted and thank once again for reviewing my copy of [i:3v8lr26m]Offline Cash Magic[/i:3v8lr26m] report
Best incentive to offer employees - What's the best incentive to offer employees? Is it more health benefits? More vacation? Health club memberships? Paying for training? Cash / non-cash bonuses & rewards? I'm preparing a new package for my company and would love to get your thoughts! Thank you in advance!
Re: Cash up front ... or Royalties? - This is a very interesting question GT. I also chose Cash up front, I like being careful, especially if I don't know what is the investment. Some business are to risky and you may never get the royalties. The best deal will be get a one time payment PLUS royalties, this is how you do business.


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