"10 Best" Ways to Rapidly & Dramatically Improve Cashflow

WHAT IS CASH FLOW?

• Cash flow is the inflow and outflow of money.
• Ideally, you want to have MORE money coming in before it flows out.
• Money flows in when you generate sales and flows out when you pay expenses.
• Not having enough money on hand to meet payroll, expenses, taxes, and other obligation causes stress.

10 BEST WAYS TO RAPIDLY & DRAMATICALLY IMPROVE CASH FLOW

1. Collect Payments in Advance: When you get paid BEFORE you have to deliver goods or services cash flow rapidly and dramatically improves.

• Attorneys require advance payment retainers. Insurance and mortgages are both paid in advance. Advance payment is common in many industries.
• Asking your customers for payment (or partial payment) in advance to start work is not unreasonable. It does not matter that nobody in your industry asks for advance payments, do you want to be successful or like everyone else? You have no risk in requesting pre-payments.

2. Increase Prices by Creating MORE Value: When perceived Value is greater than Price we call this a bargain! Lowering prices to improve cash flow will not work.

• Creating more value will allow you to increase the price which improves cash flow.
• Increase the value of your offerings by REMOVING the time delay and the effort & sacrifice associated with delivering your customer's dream outcome.
• Add value by delivering products and or service FAST and with NO EFFORT or SACRIFICE. This is exactly what Netflix and Amazon do. Today, you can order nearly anything from Amazon from the comfort of your sofa while on your phone and it arrives within hours, with no sacrifices and only a minimal time delay. Alex Hormozi offers this value-creation formula in his best-seller $100M Offers. Have a look at the formula below.

3. Increase Prices & Revenues: An annual (or sooner) price increase is not unreasonable or unusual. If you increase the price, revenues increase.

• Also, you should ALWAYS know your CAC - customer acquisition cost. For example, if spending $1,000 generates $16,000 in new business, you should be able to drive PROFITABLE revenues to increase positive cash flow.

4. Send Out Invoices Promptly and Use Payment Apps to Receive Payments: The invoice payment clock starts ticking as soon as you deliver goods or services. When you delay invoicing, you delay your organization's cash flow while at the same time sending a message to customers that you are indifferent about invoice payment times.

5. Follow up with Customers Who are Late Paying; Monitor all accounts receivable closely.

• Best not to allow your customers to use your company as their bank. You are not in business to finance your customers!
• Have candid conversations with your customers to understand their financial health.
• Forward your late-paying customers the link to Divvy below . Divvy offers credit lines up to $400,000. Your clients can use this credit card rather than your company to finance their business.
• Divvy was created for startups , consider Divvy to finance your company's growth.
• Learn how Calenderly uses Divvy to improve Cash Flow .

6. Negotiate Better Payment Terms with Suppliers/Vendors: Respectfully ask for 90-day payment terms, or 10% payment upfront, and payment in full in 90 days. Keep more of your cash on hand by delaying cash outflows.

7. Once-a-Month Payroll for Executives: Most executives will agree to be paid monthly to improve cash flow. Moving from weekly or bi-weekly to a once-monthly payroll for the executive team should provide more cash on hand to meet other obligations during the month.

8. Quarterly Cost Review of Expenses: Cost savings reduce outflows, less cash out means more cash to grow your business and meet obligations.

• Everything is negotiable, by shopping you should be able to negotiate some cost-saving or more favorable terms from your vendors.
• Start with the 2 biggest outflow items, and get 3 different quotes. Set a target savings goal.
• It's far less expensive for a vendor to lower the price to keep your business than to find a new client.
• If a vendor loses your business, they not only lose your revenues but also referrals. Keep this in mind when negotiating, show them how many referrals you directed to them.
• WE ARE ALL IN THIS TOGETHER, referring clients to your valued vendors creates more value for them and you.

9. Utilize and Adhere to a Budgeting System: Everyone needs to have a budget so you can identify and reduce wasteful spending. Forbes best budgeting app of 2023 .

10. Reduce Inventory: Inventory on a Balance Sheet is booked as an Asset, however, inventory in real life can be a Liability.

• Inventory becomes a liability if it's not rapidly turned into revenues. You should know your Inventory Turn Ration and work to constantly lower it.
• Inventory Turnover Ratio Formula = Cost of Goods Sold / Average Inventory
• Inventory ties up the cash required to pay other obligations. Reducing inventory keeps more cash on hand.
• Best to presell before your take on any inventory cost, and/or secure longer-term vendor payments to ensure that your inventory is not hindering cash flow.

Bonuses:

• Request overdraft protection on your business checking account. Overdraft protection allows you to write a negative balance into your checking account. No more bounced checks or missed payrolls, you pay interest on the outstanding balance until it's repaid. Bank of America makes it fast and easy by linking your business credit card to your checking account (I have this).
• Utilize 0%, No Annual Fee Credit Cards: You can strategically float thousands of dollars every month at 0% interest on credit cards . Pay the minimum and move the balances onto other cards when the 0% offer expires. Check out the Divvy card created for entrepreneurs .
• Set up a line of credit with a bank. A line of credit allows you to borrow when you need it and pay it back when you have it. Lines of Credit are often linked to your business checking account and can be used for overdraft protection. Ask your bank for an overdraft line of credit.
• Outsource non-essential tasks. Pay less and free up time by outsourcing anything that is not a daily requirement for growth.

Avoid:

• Avoid offering discounts for early payments as customers will take the discounts and pay you later.
• Avoid offering incentives for prompt payments. The offer suggests that the client has the option of paying late(r).
• Avoid taking additional equity investments for cash flow needs. The equity investment will dilute your % ownership. A working capital line of credit, or another debt facility, can likely solve your cashflow issues. Debt, rather than equity is a better cash flow financing tool its non-dilutive.
• Avoid factoring receivables. Factoring is "selling" your eligible receivables at a discount to a financier. Factoring can be very expensive and can become a hard habit to break.

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