Would your business benefit from a higher rate of cash flow? What doors would open up if you doubled your positive cash flow direction? It’s possible to increase it, but you have to be intentional about it. Just checking the bank balance before making a purchase is NOT being intentional.

Try these strategies to increase your cash flow:

Decrease your monthly expenses.

Nobody likes to keep hearing this, but one of the best ways to improve your cash flow and see immediate results is to reduce your spending.

The first step to implementing this strategy is to carefully analyze all of your business spending. Every year around this time of year I take my business through what I call a “Tooltime Audit”, an examination of my recurring expenses as well as business development purchases.

How much do your online memberships and courses cost every month? How much do you pay for Facebook/Instagram/Pinterest ads, for example? Do you have any other bills like email marketing software or landing page platforms? Be honest with yourself and track how much you really spent on that cool tech stack item you purchased in the hopes it would get your entire business life together (but you’re still trying to figure out how to use it).

After listing and analyzing your spending, look for areas that can be reduced. Examine the ROI (return on investment). Yes, that includes your employees and contractors. (It’s important to approach spending cuts carefully because pay cuts can drive away employees. Don’t go bananas slashing your team only to stress yourself out having to do #allthethings

Remember, your investments’ ROI isn’t just measured in dollars & sense but also in hours spent or saved. Those hours you save by delegating allow you a chance to seek out and take advantage of new opportunities for growth and expansion.

This exercise can take anywhere from a half hour or more, depending on how many recurring tools/expenses you have. Set a timer for 30 minutes and get started!

THINK ABOUT IT: What’s one investment you’ve made this year that has really helped you increase sales, gain clarity, or become more efficient?

Offer payment plans with a discount for “Pay-in-Full”ers.

If you’re trying to encourage your customers to pay faster to increase your cash flow, then discounts for fast payments may help.  The discount doesn’t have to be large, but customers may appreciate a small amount of savings.

For example, many B2B corporations sometimes offer a 10% discount on a customer’s account if the invoice is paid within 30 days.  As a small business owner, you know your product or service provides value. To make it easy for clients who need your services but may have a challenging time paying the full price upfront, you can offer payment plan options.  For those who can pay in full, you help them save money by paying in full, and in turn, that upfront payment helps boost your positive cash flow. It’s a win-win situation!

Be mindful of your inventory and how long it’s “sitting on the shelf”.

For those of you selling shirts, running an Etsy store, reselling on eBay, designing a planner or something similar:  are you aware of how much of your cash you’re investing in inventory?

Inventory may be the lifeline of your small business, but you don’t want it to destroy your cash flow. The boxes of shirts, parts, retail items or other items you sell shouldn’t take up space and tie up cash.

Find a balance between having enough inventory to satisfy customer needs and having too much.  Depending on the industry, you don’t want to be holding an item for long periods of time. Do your research and find out how long is TOO LONG for one of your items to stay on the shelf.  In accounting, we call that the inventory turnover rate.

Raise your prices.

Inflation requires that we pay way more for things we need today than we used to.  Your business is no different. Are you keeping up with inflation? An annual (or even more frequently depending on what you sell) examination of your pricing, products, and services is necessary to make sure you are remaining competitive in your market.

Not only does this lead to better cash flow, but it also keeps the perceived value of your products/services high.  Staying too cheap may actually deter customers from your offers. Finding a balance between pricing that works for your business and for your customers is not a one-time event.

Remember, keeping an eye on cash flow is an everyday task.  You should be able to give details at any given moment on how much cash you have, how much is coming in, and any negative cash flow activities that are coming up.  Most businesses fail because of lack of cash, so there’s no excuse not to know what’s going on. It’s one of the most important analytics a business owner can monitor.