Cash flow problems are the #1 reason small businesses fail — even profitable ones. Here are 10 strategies to manage it better starting today.
1. Invoice Immediately
Every day between delivering a product or service and sending an invoice is a day your cash is delayed. Invoice the moment work is complete.
2. Follow Up on Outstanding Invoices
Establish a firm follow-up schedule: 7 days, 14 days, 30 days. Most late payments happen simply because nobody asked.
3. Shorten Payment Terms
Net-30 is common, not required. Try Net-15 or Net-7. Offer a small early-payment discount (1–2%) to incentivize faster payment.
4. Require Deposits on Large Projects
25–50% deposits on large orders dramatically reduce your cash exposure during fulfillment.
5. Negotiate Extended Supplier Terms
Net-45 or Net-60 with suppliers gives you an interest-free short-term facility on every purchase.
6. Reduce Excess Inventory
Every dollar in excess inventory is cash unavailable for operations. Review inventory turnover monthly.
7. Cut Unnecessary Recurring Expenses
Audit subscriptions and services quarterly. Silent cash drains compound over time.
8. Establish a Line of Credit Before You Need It
Apply when your business is healthy. Having credit available means cash flow gaps become minor inconveniences, not crises.
9. Offer Multiple Payment Methods
ACH, credit card, digital payments. Friction in the payment process delays your cash receipt.
10. Build a 13-Week Rolling Cash Flow Forecast
Update it weekly. Seeing a gap coming 6 weeks ahead gives you time to arrange financing — rather than scrambling when it arrives.