The Easiest Ways to Increase Cash Flow
Optimizing your cash flow is one of the best ways to increase your profitability, because it gets you more mileage out of the same income. To get the most out of your operating cash, you need to understand how to use financing and when to employ different strategies to extend your payment window. The key to managing this flow is bringing in your money as quickly as possible while extending the window of time you have to meet your outgoing obligations. You don’t want to use your extended payment window every time you have an expense, but you do need a strategy for allowing yourself the opportunity to time that cash leaving your reserves.
One of the best ways to access cash when you need it to cover outgoing expenses is through invoice financing. This process allows you to receive an advance on your outstanding invoices instead of taking on new debt. Typically, the financing company will take over payment collection to ensure they are repaid, but since they are being repaid by your customers, you don’t have new debt obligations from the advance. After they receive payment, financing companies send the remainder of your income. This provides you with a convenient resource to tap when expenses are coming.
Pairing invoice financing with an extended payment window can ensure you never have to worry about penalty fees on your overhead or strained relationships with vendors and suppliers. To extend your payment window, you’ll need access to credit resources that provide you with a grace period before interest is charged. This grace period is essentially an interest-free loan, so if you pair it with other cash flow management strategies, it can get you as much as an extra thirty days to meet an obligation.
Unsecured credit lines and business credit cards frequently offer these grace periods, and it isn’t difficult to find a financing company that offers them alongside invoice financing and other strategies that will be helpful with cash management. The key is finding the right fit for your business by looking at their whole range of programs and planning ahead for the needs you can anticipate growing into. That way, you will be able to count on that relationship to provide you with the financial tools you need to really grow your business.
Don’t leave your company’s fortunes to chance. Learn to use the cash flow management tools at your disposal, and empower your company’s growth.