By Trent Derrick, CMT®
Having a brilliant idea to serve customers or fill a niche is just the beginning of business success. But if you’re not keeping a close watch on your small business cash flow, even the best ideas can hit roadblocks.
Especially when you’re just starting out, knowing exactly what’s coming in and going out, and being able to forecast your sales and expenses makes all the difference in keeping your business healthy and growing.
At Bellerophon Wealth Management, we help you take control of your cash flow with simple, practical strategies that work. Let’s explore some easy ways to keep your small business cash flow running smoothly and set you up for success.
1. Raise Your Prices
This first one’s a no-brainer. Among other small business financial problems, I’ve noticed that business owners often find it frightening to raise their prices because they’re afraid it could result in lower sales. However, it’s okay to test several price points to find the perfect number. There’s no way to tell how high your customers are willing to go until you try.
2. Pay Digitally
All business owners have bills to pay. If you pay them digitally, you can wait until the morning of the day your bill is due to make a payment, increasing your cash flow.
Another digital option is using a business credit card. Some credit card companies offer a 21-day grace period, so you could pay your bills when they’re due and then take advantage of the grace period to improve your cash flow.
3. Perform Credit Checks on Customers
Run a credit check on any customer who doesn’t want to pay you in cash. If a customer has bad credit, you can assume you won’t be receiving payments on time. Even if you really want to close the deal, your company’s cash flow could suffer from the late payments.
4. Lease Equipment and Supplies
Most business owners know that buying is cheaper than leasing. So this tip might seem counterintuitive. But to improve small business cash flow, leasing is better than buying because the smaller payments help free up cash. And unless your company is flush with cash, you’ll want to sustain a steady cash stream for daily operations.
5. Put Your Money in High-Yield Savings Accounts
The best high-yield savings accounts offer interest rates that are significantly higher than the national average, meaning you’ll earn more on the money you’ve stashed away. This can provide your company with cash liquidity.
6. Refine Your Inventory
Make a list of the stock you buy that isn’t moving at the same pace as your other products. Those sluggish products tie up a lot of cash and could reduce your cash flow. So instead of buying more of what doesn’t sell, get rid of what you do have. Increased demand for that product isn’t likely—and increasing your cash flow is a smarter move.
7. Give Early Payment Discounts
Everyone enjoys a good incentive, so by giving your clients a discount for paying their bills on time, you’re offering an opportunity for both of you to win. And, of course, receiving the payment early improves your cash flow.
8. Submit Invoices Right Away
In addition to sending out invoices immediately, your invoices should have clear terms and be simple to read. The due date should be mentioned several times (ideally in bold). Also, give precise instructions about the allowed payment methods and late-payment fees. Remember, the bottom line is to increase your cash flow, and sending out timely, no-nonsense invoices is a pivotal step.
9. Set Up Discounts With Your Suppliers
You’ll be in a better position to negotiate payment terms with suppliers if you maintain an ongoing, friendly relationship. If your suppliers are willing, pay your bills early to receive a discount. Setting up favorable arrangements with your suppliers is a key part of improving small business cash flow.
10. Consider Creating a Buying Cooperative
You could take your negotiation skills to the next level by partnering with other like-minded companies willing to pool their cash as leverage for bartering lower prices with suppliers. Some suppliers give large discounts to firms who buy in bulk.
Your Qualified Partner in Small Business Cash Flow
If you’re a small business owner in Charleston, South Carolina, managing your cash flow is probably top-of-mind. Bellerophon Wealth Management is here to guide you through cash flow challenges and any other financial planning needs you might have.
We focus on what matters most to you, putting honesty, trust, and respect at the heart of everything we do. That means recommending the strategies that genuinely support your success, not the ones that benefit us.
To get in touch, you can email trent.derrick@lpl.com or call 843-868-4042.
About Trent
Trent Derrick is a financial advisor and the founder of Bellerophon Wealth Management. He specializes in working with small business owners and professionals, providing comprehensive financial planning services including tax planning strategies, cash flow management, and retirement planning. As a Chartered Market Technician® (CMT®), Trent also brings deep technical market analysis expertise to help clients make informed investment decisions.
Trent obtained his bachelor’s degree from the College of Charleston, studied economics at the University of South Carolina, Columbia, and is a Chartered Market Technician® (CMT®) professional. Outside of the office, he serves as a guest lecturer for the College of Charleston’s MBA program and acts as chairman of the Market Technician Association’s Charleston chapter. To learn more about Trent, connect with him on LinkedIn.
The opinions voiced in this article are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investments may be suitable for you, consult the appropriate qualified professional prior to making a decision.
Bellerophon Wealth Management and LPL Financial do not offer tax advice or services.