For most businesses, figuring out how to increase cash flow is always a top priority.
Whether you’re looking for an increase in accounts payable cash flow or you’re trying to find the right attendance tracking software, a few key tactics can make a big difference.
How to increase cash flow in business: 7 tips and tactics
1. Document your process
Before you can increase cash flow, you have to understand it. Start by documenting your processes and writing a strategic plan.
If you need help figuring out how to do either, bookmark these articles to read later:
- Why Is Strategic Planning Important and What Are the Steps?
- How to Document a Process in 10 Steps: Why Process Documentation Matters
Next, create a schedule that includes looking at any decrease or increase in accounts receivable cash flow and in accounts payable.
Finally, consider implementing an accounting program and/or an integrated cloud-based payment system to streamline your process. Businesses that switch to automated payment systems often get paid twice as fast as those who process payments by hand.
2. Assess your short-term cash flow
Take a critical look at your short-term cash flow.
- Identify which regular expenses are costing you more money than they should and which are on-target.
- Make a list of the high-cost items and take action to change them.
Ask to renegotiate rates with a vendor or downsize an office space that’s larger than it needs to be — whatever it takes to decrease costs and increase cash flow.
3. Ask for payment promptly
When it comes to learning how to increase cash flow in business, invoices are key. The quicker invoices go out, the faster cash comes in. Every increase in accounts receivable cash flow depends on invoice efficiency.
Foster prompt payments by:
- Asking for payment as soon as possible, ideally using automated invoices
- Sending invoice reminders a few days before an invoice is due, on its due date and a few days after, and following up with phone calls as needed
- Giving customers incentives such as small discounts for paying invoices early
- Charging late payment fees
4. Be strategic with vendor payments
Do your vendors offer a discount for paying early? If you take advantage of those, you can quickly see an increase in account payable cash flow. If not and your vendors don’t apply discounts or penalties, make payments when it’s best for your business.
5. Consider your debt and credit
If you owe lenders money, talk to them about negotiating a lower interest rate to increase cash flow, or discuss available options for extending the payback period.
If you think cash flow may become an issue in the near future, apply for a line of credit. The best time to apply for a line of credit is before you need it, and you won’t pay anything until you use the money.
6. Check your pricing structure
When you’re wondering how to increase cash flow, it’s obvious that increasing prices is the fastest way to boost revenue. But before you overhaul your pricing structure, check in with your business and your market. Ask yourself:
- What are my competitors charging?
- Are you in line with your industry or are you way above or below the mark?
- Are my prices too low?
- If they are, you may be making your business appear to have less expertise than it actually does.
- When’s the last time I raised prices?
If it’s been a while, clients are likely to be more receptive to an increase. Just be sure to market the fact that it’s been three or four years since prices went up before you announce it.
7. Use integrated attendance tracking software
As you evaluate your pricing structure, consider the role time tracking plays.
- How much time are your employees spending on a certain client or project?
- Are you charging enough to cover that time?
- More importantly, are you charging enough to make a profit?
The right attendance tracking software will help you answer all those questions.
With Time Tracker, you can turn employees’ time into billable hours in seconds. Time Tracker will:
- Sync data every few minutes
- Connect with accounting software such as Quickbooks or Xero
- Automate payment reminders via editable templates
- Connect with Stripe so clients can pay instantly
- Generate real-time reports so you can see the status of outstanding invoices
Add that to all of Time Tracker’s other features and it can save you 30+ hours a month in administration.
Try Time Tracker today
Ready to learn how Time Tracker can help you increase cash flow in business? Try our free, 14-day trial.