Small business owners must understand the importance of strong cash flow to their company’s success. Especially in light of the current financial uncertainty due to the COVID-19 pandemic, businesses need to find ways to increase cash flow so they can continue to pay their employees and provide goods and services. Here are some tips on how you can accomplish this.

Track Company Cash Flow

Small business owners should understand all the nuances in their company’s cash flow statements. This includes details such as the opening balance, operational budget, customer receipts, payments to vendors, taxes, earned interest, and employee salaries and benefits. Be sure to monitor when income from your invoices is due concerning when your bills need to be paid. If necessary, you need to create incentives to persuade your customers to pay on time.

Maintain Strong Customer Relationships

The strength of the relationships that you maintain with your customers will be significant in determining the success of your business. If you form authentic relationships, customer loyalty and referrals will help to increase cash flow for your company.

Obtain Funding Based on Revenue

Some alternative financing companies offer revenue-based funding. You receive a fixed amount of money upfront, and you pay it back through a percentage of your upcoming profits. One of the advantages of this form of financing is that it is based on a business’s income; when you earn more, your payments are higher, but when sales are slow, you pay less.

Find Investors Through Crowdfunding

Crowdfunding platforms can help you pitch your business to numerous potential investors. Start by creating a company profile and plan a campaign that will effectively showcase your business ideas.

Factor Invoices

One source of difficulties in cash flow for businesses is unpaid accounts receivables. Instead of experiencing hardships while waiting 30 to 90 days to get paid, you can sell your invoices to a factoring company in exchange for immediate funding. This is a good option for companies with poor credit ratings, as factoring companies are mainly concerned with the creditworthiness of your clients.

For more advice on how to increase cash flow for small businesses, contact Toluca Lake Capital.