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“Cash is king,” as the saying goes.  Sell all the products and services you want, but if you can’t get the cash in the door—at the right time and in the right amount—your business will suffer.

You might ask, “How could I be profitable yet run out of cash?”

Because you might be using your profits to buy inventory, fund your receivables, pay down debt, or buy other assets.  And without cash, you have to borrow more from the bank, which will cost you.

So, what can you do to both increase your available cash and manage it better? Here are 11 tips to follow:

1. Forecasting

“Failing to plan is planning to fail.” This is especially true when it comes to cash flow.  Through cash-flow forecasting, you’ll have an “early warning system” to help you detect future shortfalls.  This will allow you to make necessary adjustments ahead of time before you get too deep in a hole.

Making cash flow projections will also help you understand your inflows and outflows of cash.  By studying these inflows and outflows, you can start to identify ways to get cash in the door sooner and reduce the rate at which cash is leaving.

For example, you might identify a receivable that is important to collect within the next two months.  You can then start trying to collecting it now, not on the day you really need it.

In terms of forecasting, start off by projecting four to six weeks out.  Then, extend it to three months, six months, and a year.

2. Keep Track of Your Cash

Understand how your business tracks its cash flow.  If you’re unsure, talk with your accountant or someone at your business who does know.

Most businesses use a statement of cash flow, although there are a lot of variations in how businesses use them.   Generally speaking, you’ll want to keep track all cash coming in and out of your business.  You’ll want to see this broken down by month and over the course of a year.

It’s also a good exercise to compare the projections you made in the past (see #1) with your current balance.  Are these projections in line with reality? If not, what adjustments do you need to make to your projections going forward?

To see examples of cash flow statements and similar documents, you can see Score’s finance templates available for free here.

3. Get Your Receivables in the Door

Be proactive in collecting overdue payments.  Communication is key.  When following up on overdue invoices, emails and letters sometimes don’t do the trick–or at least not as quickly.  Pick up the phone and call the customer.

From now on, send out invoices more quickly.  And cut down on the time it takes you to follow up on overdue invoices.  Condition your customers to hear from you the moment an invoice is late.  Otherwise, they might pay others first.

4. Demand more cash up front

Collect as much as you can, as quickly as you can. For example, consider demanding payments in installments of 30%, 30%, 30%, and then 10% on completion.

5. Offer Discounts for Early Payment

Consider offering discounts to customers if they pay early.  Getting the cash sooner, rather than getting more of it, could make sense.   As I said in the last article, though, be careful when giving discounts.  Know the impact of a discount before offering one.

6. Be Careful When Offering Credit

Do you have a system in place for vetting customers wanting to pay on credit? If you’re having trouble collecting from customers, institute a standardized approval process to vet customers (or make your current one stricter).

7. Extend Your Payables

When negotiating with suppliers and creditors, try to extend the payment terms.   Paying a higher price–but getting to pay it later—could be better than paying a lower price.

And if a bill is due in 30 days, don’t pay it in 10 days.  Prolong payments as long as possible.  Don’t incur late fees or interest charges, though.

8. Control Your Spending and Stick to a Budget

Enough said.

9. Liquidate Unnecessary Inventory

A lot of your cash could be tied up in inventory.  See what you can sell to free up cash.

10. Speed Up Your Project Completion Time

The longer you take to complete a project, the more cash you’ll have tied up in the project and the longer it will take you to get paid.

11. Keep Reserves

When you have a surplus of cash, do your best to save it for a rainy day.


Like everything I teach business owners, mastering cash flow is about putting in the hard work up front.  By mastering cash flow, you’ll not only have more cash to work with but you’ll also incur fewer costs too.  It’ll also eliminate a lot of stress, as you’ll know exactly how much cash you have and how you’re going to pay all of your bills.


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