8 Cash Flow Planning Tips and Tricks for Businesses

Published September 20th, 2023 by River Point Capital

As a business owner, you've likely heard this worrying yet all too realistic statistic: 82% of small businesses fail due to cash flow problems.

Simply put, not having enough cash on hand to cover expenses can make or break your business. That's why cash flow planning is crucial. As a business owner, you must create a financial roadmap to ensure success.

Stick with us if you're unsure what that means or where to start. We'll share eight cash flow planning tips and tricks to help you navigate through the highs and lows of your business. Whether you're a small business or a publicly traded company, these tips will guide you toward sound financial decisions and help you secure the funding you need.

What Is Cash Flow Management?

Cash flow management is a crucial aspect of running a successful business. Essentially, it's the monitoring and tracking of cash movement in and out of your company. If you want your business to thrive, you need to have a handle on your cash flow.

But what exactly does that mean?

healthy cash flow means your business generates enough income to cover expenses and still has money to invest in growth. You can measure this through your cash flow statement, which outlines the sources and uses of your business's cash over a specific period.

A cash flow forecast is essential for measuring and managing your cash flow.

This is a projection of your business's expected cash inflows and outflows over a certain period. With a cash flow forecast, you can better anticipate any cash shortfalls and prepare accordingly. This means you can take proactive steps to manage your cash flow, such as negotiating better payment terms with suppliers or adjusting your pricing strategy.

Overall, healthy cash flow is vital to the success of any business. With effective cash flow management, you can maintain a stable financial foundation for your business and pave the way for future growth.

8 Cash Flow Planning Tips

Understanding what cash flow management is can only take you so far. You also need to arm yourself (and your team) with cash flow planning tips, which is why we've put together these eight tips to help you plan and manage your cash flow effectively. 

1. Create a Cash Flow Forecast

The first step in managing your cash flow is to create a cash flow forecast. This will help you identify any potential cash shortages in advance so you can plan accordingly.

As mentioned above, a cash flow forecast should include your expected cash inflows and outflows for the next 12 months. It can also help you to identify any potential cash flow gaps and take action to address them before they become a problem.

2. Monitor Your Cash Flow Regularly

Monitoring your cash flow regularly is important, especially if you're a small business or company bringing in multi-million dollar returns.

This will help you identify any potential issues early on and address them before they become a problem. Monitoring your cash flow can also help you to make informed business decisions that can help you improve your cash flow management.

3. Manage Your Accounts Receivable

Managing your accounts receivable is another important aspect of cash flow management. You can improve your cash flow by invoicing your customers promptly and following up on any overdue payments. You can also consider offering incentives for early payment or implementing a recurring payment system.

4. Manage Your Accounts Payable

Managing your accounts payable is equally important. You can avoid cash flow problems by negotiating favorable payment terms with your suppliers and paying your bills on time. This can help you to avoid any unnecessary late fees or penalties.

5. Reduce Your Expenses

Reducing expenses can help you manage your cash flow and boost your profits (which is the ultimate goal at the end of the day, right?). Consider reviewing your monthly expenses and cutting back on unnecessary costs, such as subscriptions or office supplies. Depending on your service providers, you may also consider renegotiating contracts with vendors and suppliers.

6. Implement a Cash Reserve Policy

Implementing a cash reserve policy can help weather any unexpected cash flow shortfalls. This policy should include setting aside cash reserves to cover unexpected expenses or emergencies. This can help you avoid any potential cash flow problems that could threaten the survival of your business.

7. Work with a Financial Advisor

If you're having trouble implementing these cash flow planning tips, working with a financial advisor can help you manage your cash flow more effectively. They can help you:

  • Identify any potential cash flow issues
  • Develop a cash flow forecast
  • Guide how to manage your cash flow more effectively

They can also help you explore alternative financing options and develop a cash reserve policy that works for your business. Speaking of alternative financing, it's definitely worth it to...

8. Consider Alternative Financing Options

You may not always have access to traditional financing options if you're a small business or a publicly traded company valued at up to $300 million. It's important to explore alternative financing options like inventory financing, invoice financing, or peer-to-peer lending to help you bridge any cash flow gaps or fund your business needs.

Alternative Financing Options

Why have we harped so much on alternative forms of financing? Getting much-needed cash when your business needs it the most can be a lifesaver. Traditional lending practices can be slow, rigid, and not designed for small businesses.

At Riverpoint Capital, we offer alternative forms of financing like:

  • Inventory financing
  • Business lines of credit
  • Short-term funding
  • Bridge loans

These options can provide quick access to cash without the time-consuming processes of traditional lenders. Moreover, alternative funding options like inventory financing and bridge loans can be secured using collateral, so you won't have to worry about sacrificing ownership or equity. 

Improve Your Business Finances

Ultimately, cash flow planning is an integral part of fostering sustainable business growth. Our solution? With our speedy non-dilutive funding options, we aim to provide businesses with financial flexibility and freedom.

Our receivables-based financing grants access to over $10 million within 24 hours without requiring your business to issue new shares or pledge assets as collateral. 

Apply now if you're looking for a reliable partner to support your cash flow planning and business growth! 

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