Maximizing Your Cash and Succeeding: It’s Not as Difficult as You Think



If you’re reading this blog, then you already know how vital cash flow is.

Cash flow is the mainstay of your business. There are no goals that are more important than keeping your cash flow positive.

It’s downright vital to cultivate a steady stream of “free cash flow quickly” — that is, the amount of cash coming into your company over and above all your expenses.

More than anything else in your business, stay on top of your cash flow, monitoring cash flow statements weekly to keep your eye on the pulse of your business.

Are your revenues more than you’re spending? That’s good.

Is your cash flow regularly edging into the red? Not so good.

When possible, keep 10% to 20% of monthly revenues on hand because, at that point, you will be able to reinvest into the growth of your business. Conserving cash flow is how your business retains its cash position and maximizes every available dollar.



  • Can your business increase cash flow and maximize profits at the same time?



  • Prepare and maintain a 3-month rolling cash flow forecast. You can’t manage what you can’t see.
  • Produce a realistic, detailed cash flow forecast for at least three months and update it weekly.
  • Identify potential cash flow crunches and plan accordingly.
  • Keeping on top of your cash flow allows you to prepare for seasonal spikes, take advantage of sudden opportunities and manage through slow periods.




  • Slow your cash outlay.



  • Make Delayed Payments.
  • If you have vendors with whom you have established a good working relationship, try to negotiate a more extended repayment period so that the cash will go back into your business.
  • Pay your bills on time, but never pay your bills before they are due.
  • Trade discounts. Requires you to pay your bills quickly, but you can take advantage of a discount by doing so.
  • Stretch payments to your one-off and small suppliers when needed to manage cash flow.




  • When cash is tight or negative, prioritize payments.



  • Payroll is #1. Taxes are #2.
  • Equipment leases, bank loans, mortgages, and other items require prioritization since they are financed.
  • Late payments to finance companies are reported to credit bureaus and can damage your credit rating, making it harder to secure financing in the future.
  • Pay suppliers who you will need services from in the future.
  • Finally, pay all other suppliers as quickly as possible as cash flow allows.
  • When things are tight, talk to your creditors and negotiate extended terms or make partial payments.




  • Manage your inventory.



  • Trim Inventory and have inventory control systems in place.
  • Consider the 80/20 rule regarding product lines.  Know which products generate most of your sales and profits.
  • Reduce or eliminate the bottom 20%.




  • Increase profitable sales.




  • Focus on increasing sales, especially to customers who pay cash or pay quickly.
  • Request prepayment, deposits, or progress payments where it makes sense.





  • Establish clear credit management policies.




  • Make sure everyone in your organization understands your payment terms and policies.
  • Have staff dedicated to collections?
  • Measure and compensate salespeople not on when a sale occurs but when it is collected.
  • Set credit limits with customers.
  • Run credit reports on your customers, and update them at least every six months.
  • Don’t be afraid to deny or limit credit to overdue accounts.
  • Layout payment terms clearly with your customers beforehand and on your invoices.
  • Offer discounts for early payment and penalties for late payment.
  • Send out invoices promptly and invoice accurately electronically.
  • Don’t wait until to invoice.
  • Make sure invoicing is accurate.
  • Errors on invoices provide a convenient excuse for customers to delay payment.
  • Always include the due date on invoices.
  • Chase overdue accounts.
  • Call the day after payment is due.
  • Don’t be afraid to ask for payment.
  • You are showing your customers that you are organized and on top of your business.




  • Sell your invoices.




  • One of the most dramatic ways to improve cash flow is to sell or factor your invoices to a factoring company.
  • You get your cash right away while the factor takes over the waiting period.
  • The cost can often be offset by securing discounts from suppliers for your early payments.




  • Re-evaluate your terms.



  • Request down payments from new customers and for large orders.
  • Can you reduce your payment terms?
  • Reducing your payment terms from 60 days to 30 days will significantly impact your cash flow.
  • Do you offer early payment discounts?
  • Categorize your customers and focus on those that are profitable.
  • Take a close look at your customers and identify priority customers.
  • Recognize customers that generate the most profit, not necessarily the most revenue. What can you offer them to incent them to pay earlier?
  • Discover your worst payers and develop a strategy on how to improve their outstanding days.
  • Decide if they are worth keeping.




  • Categorize your suppliers.




  • Identify critical and non-critical suppliers.
  • Take a look at your suppliers’ payment terms. Are they competitive?
  • If your suppliers’ payment terms are not competitive, look for new suppliers.
  • Try to negotiate better terms with your most prominent and critical suppliers.





  • Evaluate how you spend your working capital.




  • Do you have timely access to additional working capital when needed to finance growth?
  • How will you manage the cash flow stresses associated with growth, such as bringing on additional employees, holding more inventory, or purchasing more materials?
  • Don’t wait until you are in a cash flow crunch to secure additional sources of working capital.
  • Talk to your banker, alternative lender, or financial advisor in advance, so you don’t find yourself in a cash flow crisis.
  • Staying on top of your cash flow is critical to the success of your business.
  • Take the steps necessary to make sure the cash flowing out of your business does not exceed the money flowing into your business.





As a business owner, it is good to resist the temptation to buy new equipment or hire additional employees for the business.

Before adding any extra expenses, it is good to weigh both the pros and cons. If the pros lead the race, then go for it but if not, stop that decision and work with what you have. Following these processes will help you retain cash flow in the business.

We all know that maintaining a steady cash flow in any business is very difficult. However, with the above steps, you will improve your company’s bottom line and the business’s overall success.

Plan! Adapt! Manage! Succeed!

AccuComp Enterprises is a team of experienced CFOs that can help you grow.

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