Top Five Ways to Increase Cash Flow
These tips have proven successful in our efforts to help our clients. If you find that you are not sure how to utilize them, or not comfortable in doing so, please do not hesitate to reach out.
- Rework Existing Financing: Spend some time on your financials either alone or with help. Bring in a new expert, someone with fresh eyes to help you review your Income Statement and Balance Sheet. Consider consolidating your debt into one package at a lower rate and boldly ask for creative lending solutions.
- Convert Excess Inventory: Inventory means tight resources for shelf space to employee time which, in turn, leads to a shortage in cash. Take the time to review your supply chain processes which will allow for downsizing and/or converting to “just-in-time” inventory management procedures.
- Eliminate Prepayments and Deposits: Take the time and review which suppliers and vendors may be tying up your cashflow when requiring. One example: your insurance company requires a yearly deposit for its services. Rather than allow for your cash to be frozen, ask for a monthly arrangement to ensure that you have flexibility and options with your cash assets.
- Aggressively Negotiate Credit Terms with Suppliers: Similar to the previous step: ask for discounts where applicable; leverage your strengths to negotiate more competitive rates.
- Eliminate Unnecessary Equipment: Allow yourself some wiggle room when it comes to leases, maintenance contracts, and other monthly arrangements.
Selling off a portion of your equipment, and then leasing it back can be ideal in freeing up your cash assets. Additionally, selling off equipment that has associated debt such as a bank loan or equipment lease that are no longer necessary for your operation can rid your space of clutter and free of cash: killing two birds with one stone! This can lead to a discussion about repackaging loans with then lender and lowering your payment.