Small business tips: how to improve business cash flow

In its simplest terms, cash flow refers to the movement of money in and out of your business over a given period. It’s crucial to business health and adaptability. It can help you avoid surprises and lay the groundwork for growth. The right cash flow management strategies can help your business prosper when times are good or navigate potential financial challenges that come your way. 

Do businesses have cash flow problems? A recent report by QuickBooks revealed that 56% of American small businesses were owed money from unpaid invoices, with an average outstanding balance of $17,500 per business. 47% of businesses had invoices overdue by more than 30 days.  

To stay efficient, use strategies such as regularly monitoring your company’s cash flow, simplifying your receivables, enhancing payables, forecasting on a regular basis, and using digital tools to improve your cash flow situation. 

Check your cash flow more often

Business cash flow best practices involve monitoring on a weekly or even daily basis. While some businesses review their cash flow monthly, doing so more frequently means you’re more likely to catch any issues as they happen and respond faster. 

More frequent monitoring can also help you protect your business against financial surprises. Try setting recurring reminders until reviewing your cash flow becomes routine. Many companies also use accounting software to make this process easier and more automated.  

Accelerate and simplify receivables 

For more cash flow consistency, make sure you clarify your payment terms upfront with each customer to avoid delays and send your invoices promptly. Offering automated clearinghouse (ACH) and digital payment options can help you streamline your collections, while automated invoicing tools can reduce manual work and ensure timely delivery of bills to your customers. 

Working with our receivables management solutions can help with this process. We offer: 

•  Lockbox services: Have your receivables sent to a dedicated post office box so each payment is deposited promptly.* 

• Remote deposit capture (RDC): Scan and deposit checks right from your office. 

• Merchant services: Process payments every way from anywhere. 

Not only can this help you improve business cash flow, we can also use the data from your bank accounts to create customized financial reports that are fully exportable in Excel, CSV, Quicken and QuickBooks formats. 

Keeping track of payables can help you look for trends, such as customers that are routinely late making payments or need to be reminded that a payment is due. It also lets your business account for this in your cash flow monitoring and forecasts

Optimize payables to protect outflows 

Of course, managing cash flow is about more than collecting payments on time; you also have bills to pay. By managing payables with efficiency, you’ll protect your cash availability, reputation as well as your business credit score. You’ll be able to process payroll, make wire transfers, schedule payments, and set up recurring payments with ease. By automating any recurring payments, you can also save time and avoid late fees. 

Forecast frequently using a rolling 13-week model

One of the most convenient tools for cash flow management and forecasting is to use a rolling 13-week model. Many businesses use this approach because it’s essentially looking at your cash flow over an entire quarter, with the scope of your analysis advancing every week. This can help you with quarterly planning, while offering meaningful lead time to help your business predict any gaps or opportunities before they hit and adjust accordingly. By reviewing this regularly, you can adjust your assumptions and look for trends, such as any seasonal impact on your business income. 

Use digital tools and accounts to keep cash flow moving 

With the right merchant services tools, you can speed up customer payments, set up alerts, and automate routine tasks that support your cash flow activity. Our merchant service offerings let you accept credit, debit, and digital wallet transactions in person, online, over the phone, or through the mail, with state-of-the-art security and scalable solutions that can grow along with your business. 

To improve liquidity, consider sweep or zero balance accounts to make better use of your cash use. A sweep account automatically transfers funds between your accounts at a predetermined level at the end of each business day. A zero balance account keeps a daily balance of zero by pulling in only the funds needed to cover payments as they post, which helps you centralize cash and avoid leaving unused money in multiple accounts. 

Either option can simplify your cash management, while also making the most of your balances. For example, you might receive payments to your business checking account and have funds automatically transferred to another account to earn interest. 

Our treasury management services can help with cash management by automating payments and streamlining reconciliation, while offering convenient access to real-time information. With our business credit cards, you could use a single card for purchasing, travel, expenses and accounts payable. Your business also benefits from comprehensive fraud protection that can help you stop fraud before it happens.  

Good habits pay off

Cash flow discipline at your business creates financial flexibility and confidence while helping your business run more efficiently. With the right tools and routines, you can make smart, timely decisions to make the most of your cash flow and get your money to work for you.  

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