Increase Cash Flow

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Lack of cash is very expensive. That might sound counter-intuitive, but what it means is that a lack of cash will choke and cripple a company. The smaller the organization, the more obvious the impact of poor cash flow. The bigger the organization, the slower the behaviors of responsibility may be.

Ways to Increase Cash Flow

The first thing you can do to increase cash flow is to collect past due receivables. It takes a fair approach and some conviction to succeed. You’ll have to reset expectations to get the account balance back on track. However, that effort is worth it because doing so can have an impact on cash flow immediately and in the future. 

Second, you can lean your inventory surplus. This is done by planning your consumption and then imposing that accountability on your vendors. This is a big move, and it will take time. However, you’ll find the benefits of a lean inventory will pay you back in the long run. When your inventory runs leaner, you’ll likely find that the rest of your operation does, too. This not only means increased cash flow, but it also means your organization works better overall. 

Third, is to use a line of credit to your advantage. Credit can help with the ebbs and flows in cash demands. If you have a credit facility, then you need to make sure it’s right for your company. Look at it with a critical eye. Is it really right for you? Is it allowing you to grow? Oftentimes, as new levels of volume are achieved, the line of credit will have to grow in proportion. 

Keep Your Vendor Relationships Satisfied

One thing you need to do to as you increase cash flow is to position your organization to keep your vendor relationships satisfied when your receivables aren’t timely. You will not successfully grow if they don’t deliver on their end. 

Have regular discussions with your vendors to ask what can be done from both sides to reduce costs. This mutually beneficial look at the relationship will only help strengthen it. You’ll also find that vendors who you’re in good standing with will tend to give you special terms or treatment when you need it. If you always keep your account paid and work with the vendor to improve the relationship, they’re more likely to work with you to help improve your growth, which will in-turn increase cash flow. 

When it comes to increasing cash flow, there are many soft benefits that come along with doing the things outlined above. These can vary depending on the organization, however, if you focus on the three areas discussed as well as improving vendor relationships, you’ll find that not only does your business increase cash flow, but it also runs better overall. 

Want to find a partner that’s as interested in increasing cash flow as you are? Contact Mainstay Manufacturing today to learn how we can help you with your metal fabrication and machining needs.