5 Ways For Small-Business Owners To Improve Cash Flow Without Borrowing

5 Ways For Small-Business Owners To Improve Cash Flow Without Borrowing

Cash flow is the lifeblood of any business. If you don’t have enough cash coming in, it can be difficult to make payroll and keep your doors open. Unfortunately, managing cash flow for a small business can be challenging without borrowing money or taking out a loan. But with careful planning, small-business owners can improve their cash flow without going into debt!

It may also be helpful to seek advice from a professional funding company like Fundwise in Chicago.

In this blog post, we’ll discuss five ways that will help you increase your cash flow without borrowing.

1. Get Customers to Pay Invoices on Time

Delinquent invoices are the number one cause of cash flow problems for small businesses. If you wait until the last minute to collect a payment, the chances are that your customers won’t be able to pay on time.

To avoid this problem, get into the habit of sending payment reminders at least a couple of weeks before an invoice is due. You can also encourage customers to pay early by offering a discount for early payments. Remember to follow up with invoices and send email reminders to keep customers notified about late payment charges.

2. Reevaluate and Reduce Operating Expenses

Operating costs are a severe headache for startups with cash constraints. With cash flow problems plaguing your business, this is the right time to go back to the drawing board and reevaluate the operating costs.

Ask yourselves what the most critical expenses are? And what costs can you eliminate or reduce? Operating costs generally include rent payments, utility bills, and sundry expenses; try highlighting expenses that you can limit or cut.

3. Liquidate Old Inventory

To churn out the cash, you need to sell if there is old inventory piling up in your storeroom. Selling this stock will bring cash into the company and clean out space for new items that you can stock on shelves. Why not try giving discounts on old stock as an incentive for customers to purchase it?

4. Increase the Prices of Your Products

Another simple way to generate more cash flow is to raise the prices of your products or services. We recommend increasing the prices of those items or services which are in high demand. You can also ask for higher payments upfront before beginning work with clients rather than billing them at the end, which will help generate much-needed money sooner.

5. Equity Stake

Lastly, you can ask friends or family to invest in your business with an equity stake instead of a loan. Equity is typically cheaper than debt if you’re sourcing it from people close to you who know what they are investing in; these investors have already seen the value of their investment grow by agreeing to help fund its future success!

If you’re looking to raise finances for your business or need consultation on startup management in Chicago, IL, then Fundwise is the right choice for you. We fuel your business dreams by offering startup funding and customizable business loans. Apply for our program now!