“How do I make sure I have enough cash to keep the lights on and make payroll?”Â
We get this question a lot. The anxiety around cash flow keeps many business owners up at night, especially during seasonal slowdowns or unexpected challenges.
The good news? There are practical steps you can take today to get better control of your cash position. Here are five strategies we recommend:
Track your cash flow weekly, not monthly
Most business owners only look at their cash position monthly when reviewing financial statements. This is too infrequent to spot trends or address issues early.Â
Set aside 30 minutes each Friday to review:
- Current bank balances
- Expected incoming payments for the next 2 weeks
- Upcoming bills and payroll obligations
- Any unusual expenses on the horizon
This simple weekly check-in helps you anticipate and plan for cash crunches before they become emergencies.
Speed up customer payments
The faster you get paid, the better your cash position. Consider:
- Offering small discounts (1-2%) for early payment
- Making it easy to pay with credit cards and ACH transfers
- Following up promptly on overdue invoices
- Requiring deposits on large orders or projects
Many of our clients have cut their average collection time from 45+ days to under 30 days with these approaches.
Build a cash buffer
While it may seem impossible when cash is tight, gradually building a reserve of 2-3 months of operating expenses provides crucial protection.Â
Start small by automatically transferring even $100 per week to a separate savings account. Having that buffer meant the difference between weathering the storm or closing your doors.
Negotiate better payment terms
Review your vendor payment terms and look for opportunities to extend them.Â
Many suppliers will agree to net-45 or net-60 terms for established customers with good payment history. This keeps cash in your business longer. Just be sure to still pay on time to maintain those relationships.
Get a line of credit before you need it
Don’t wait for a cash crunch to apply for financing.Â
Building a banking relationship and securing a line of credit during good times gives you a safety net for seasonal fluctuations or growth opportunities. We recommend having financing options in place that cover at least 10-15% of your annual revenue.
The key is being proactive rather than reactive with cash flow management. Small changes in how you monitor and manage cash can add up to major improvements in your financial stability.
We're Here to Help
Need help implementing these strategies in your business? Our advisors work one-on-one with owners to build customized cash flow improvement plans. Contact us for a free consultation to discuss your specific situation.
