Eight out of 10 businesses fail within the first 18 months, and 96 percent of businesses fail within ten years. A company may have all the revenue in the world, but without the ability to generate and maintain cash, it will likely fail. This document provides proven methods for increasing business cash flow. Why do such a high percentage of businesses fail? More often than not it is due to cash flow issues. Without the proper amount of money on hand, companies can run into serious trouble and even be forced into bankruptcy. In the business world, cash is king.

1. 16 SECRETS TO INCREASE
BUSINESS CASH FLOW

2. DID YOU KNOW?
8 out of 10 businesses fail in the first 18 months
96% of businesses fail within 10 years

3. 1. Speed up receipt of cash
2. Use your business credit card
3. Know where you are spending and why
4. Encourage use of payment cards
5. Work with your accountant
6. Offer discounts for quick or early payment
7. Improve your marketing
8. Analyze your cash flow
9. Deposit cash into interest-earning accounts
10. Schedule Payments on Long Contracts
11. Get a line of credit
12. Longer term financing
13. Put your cash to work
14. Consider subscription sales
15. Re-evaluate and fine-tune product pricing
16. Invest in your business
16 SECRETS

4. #1: Speed up receipt of cash
Shorten Receivable Process
● Offer a small discount to customers who pay their bills early.
● Charge a penalty to those who pay late.
● Monitor your receivables on a weekly or bi-weekly basis and follow-up with late payers
when appropriate.
● Expedite, the process for sending out invoices immediately after the delivery of goods
or services.
● Revise your payment terms. If your current terms are 60 days, then change them to 45
days or 30 days.
● Offer credit. Be careful when extending credit and always do a financial check on new
customers before offering them credit. Also, check their business references.

5. #1: Speed up receipt of cash
Use an Automated Tool
● Automatic discounts and penalties for early and late payments.
● Automatic messages for late payments, or reminders when a payment due date is
close.
● Ability to mark orders as delivered in your tool, and have invoices immediately sent.
● Automated credit checks, increases, and applications for potential customers.

6. #2: Use your Business Credit Card
Tips for using your business card:
● Consider using your business credit card to pay suppliers and make purchases.
● Learn about your card's grace period, and take advantage of it - you may have up to 21
days after receiving your statement to make the payment.
● Get a card with cash-back features or rewards.
● Speak to your business banker about the card that's right for you.

7. #3: Know where you are spending and why
Find a platform that gives you full visibility and control of your spending
● Evaluate spend and expense management platforms to take advantage of automated
solutions that can support better spend management to increase cash flow.
● Choose a platform that allows you to receive notifications when you are nearing budget
caps, or when others add expenses.
● Add the platform’s app to your smartphone, and check budgets in real-time before
making new purchases.
● Make sure other members of your team are using the app to control their spending.
● Regularly assess your budgets and watch for areas to cut back cash spending.

8. #4: Encourage use of payment cards
Depending on the nature of your business, you may want to consider accepting credit card
and debit card payments. This allows you to receive next-day value for your sales and
services, without the need to handle checks and make deposits.
Whether you serve customers over the counter or online, a merchant services solution
makes it easy to process payment cards.
Compare costs and features when investigating in a merchant services solution.
Anticipate the “added” cost of accepting credit card payments and factor its potential impact
on your pricing and desired profit margins.
Consider only taking credit cards for payments, and keeping a card on file to charge invoices
to upon delivery.

9. #5: Work with your accountant
Accountants should be just an asset, and a trusted business advisor. Your accountant can
review cash flow projections and results, provide insights into areas that you may have
overlooked, and help you anticipate and plan for cash flow problems.
Tips for working with your accountant in regards to cash flow:
● If you don’t trust your accountant as a business advisor, get a different one.
● Ask for suggestions on improving cash flow.
● Bring all of your business information and data to the accountant to present a full view
of what you are working with.
● Consult with them multiple times a year to stay on track and get suggestions for
improvements.

10. #6: Offer discounts for quick or early payment
Develop a discount program to encourage faster payments this helps by, collecting cash
owed to you as quickly as possible, increasing your cash on hand.
Typical payment terms allow a 30-day period for remittance after the receipt of an invoice,
with a 2% discount if paid within the first 10-days. You can offer more, less, or no discount
for payment, depending on your needs and your customer's’ past payment habits.
Tip: Remember, however, that your ability to institute a collections policy will depend upon
your relative strength versus that of your customer. A major account might take an offered
discount and still pay late.

11. #7: Improve your Marketing
Any improvements you can make to your business will ultimately lead to improved cash
flow. Marketing, in particular, is a huge contributing factor to the health of your organization
as it should continually generate new leads for your products and services.
Improving marketing reduces your cost-per-lead, increases the lifetime value of your
customers and opens up untapped markets.
Are you having trouble fostering trust and gaining credibility with your clients? It may be time
to implement a content marketing initiative that educates your leads, improves your
conversions and elevates your company image.
Marketing is an investment. Get assistance in choosing a marketing strategy for your
company based on current markets, assets, skills, and budgets.

12. #8: Analyze your cash flow
Many businesses go through cyclical highs and lows. Clothing retailers, for example,
typically have their best months in December, while schoolbook and uniform suppliers do
well at the beginning of a school year.
A cash flow analysis can highlight the cycles in your business. This information can be used
in many ways, such as timing your borrowing, arranging the right amount of staffing, and
boosting your marketing efforts during lulls.
Tip: This is another area where your accountant’s assistance will help. They’ll provide
analysis of your funds and market to give you realistic expectations, as well as suggestions
for staying cash positive.

13. #9: Deposit cash into interest accounts
Keep money liquid. Interest-earning checking accounts are available at most banks today
with a minimum balance requirement.
Since interest rates on these accounts are often below rates on savings accounts,
certificates of deposit (CDs), or money market accounts, keep the bulk of your funds in these
higher-paying accounts.
Then, transfer necessary funds from higher-paying accounts to meet the minimum balance
requirement in an interest-bearing checking account plus the total of the payments expected
to come due that week or month.
Tip: Ask your customers to make direct payments to the higher-earning account for
accounts receivable so that interest begins immediately.

14. #10: Schedule Payments on Long Contracts
Some customers, due to their size or policies, will refuse to enter into contracts that require
initial deposits. Rather than lose the business, negotiate payment terms and benchmarks
that exceed or parallel your costs.
For example, a typical construction contract might allow a 15% payment when engineering is
completed, an additional 25% upon delivery, and 50% of the contract amount at other
progress benchmarks. The remaining 10% of the contract price is usually held by the buyer
until final inspection and acceptance.

15. #11: Get a line of credit
Having a line of credit in place to cover short-term needs and emergencies is a much more
efficient way to manage your cash flow than trying to get a loan in a hurry.
Rates are competitive, you can draw from your line of credit when you need it, and you pay
interest only on the amount borrowed. Arrange for a line of credit before you fall short, and
use it when an emergency presents itself.
Tip: After using the line of credit, you can request occasional increases to have even more
funds available for emergencies.

16. #12: Longer term financing
Consider taking a loan to purchase a piece of equipment, car, or computer system instead of
buying it outright with cash/savings. You'll free up some cash that can be used to tide the
business over when cash flow is tight.
Be sure to shop around for rates and payment terms that work best for you. For instance,
during the summer and Christmas season, and tax season computers and other electronics
are often on sale. If you can wait for these times, you’ll get better rates and prices.

17. #13: Put your cash to work
High-interest savings account for business allows you to earn a competitive rate of interest
on your cash on hand, but the funds are accessible whenever you need them. You earn
interest every day on each dollar saved and can withdraw the money whenever you need to.
Internet savings account are a great example of higher interest accounts; many are offering
debit cards that give you immediate access to your funds, though you may have to keep
certain minimums in the accounts.

18. #14: Consider subscription sales
Another way to improve your cash flow is by offering deals on your products or services to
customers who buy for a fixed period.
A subscription-based product such as a newsletter or magazine is a good example of how
continuity sales work: you pay the publisher upfront for a one-year or two-year subscription;
in return, you get a better deal on the cost of the newsletter.
Continuity sales can be made to work for almost anything. Your customers save money on a
package of goods or services, and you get the cash upfront.
Depending on the amount of clients you have, it might be fruitful to collaborate with another
business to offer a subscription program.

19. #15: Re-evaluate and fine-tune pricing
Is your pricing optimized? Could you be selling for more? When was the last time you
evaluated your pricing strategy and compared it to your business costs?
You may be concerned that your sales will suffer if you raise your price too much, and that is
always a possibility, but it’s best not to come to any preconceived conclusions without first
testing and to find out what the market can bear. This is especially important when running
an ecommerce business, where you have the physical inventory you must buy first.
When you increase the price of your products, their perceived value also tends to rise.
Customers who haven’t been taking advantage of your offerings may be more inclined to
make use of them if they require a larger investment at the outset.

20. #15: Re-evaluate and fine-tune pricing
If your pricing is too affordable, you may not be taken seriously, and customers will wonder
about your quality. But if your pricing is too expensive, you will lose some business to
competitors. So, you have to recognize that a lot of margin sits in the happy middle and that
your task is to find a price point that helps boost your cash flow while not resulting in lost
sales.
To increase prices, start by assessing the market costs of your products. Next, choose a
small number of goods or services to test, and begin raising prices.
Take the information from new sales and compare it to sales before the change, on just the
products whose prices have increased. If sales increase, add more products to the test, if
not, watch the comparison for a longer amount of time, and make changes based on the
results.

21. #16: Invest in your business
Any steps you can take to build your business, such as training staff or boosting your
marketing, can help improve cash flow. For instance, the new sales team will be an
investment, but should quickly prove their value with increased cash flow.
Similarly, courses that teach sales, marketing, pricing, or other strategies should result in
improved cash flows. However, please do your research first, to qualify any purchases you’ll
be making.

22. Conclusion
Financial flexibility is important to every company, particularly when the future economic
environment is unclear. Having cash on hand allows your business to be prepared for
emergencies, take advantage of amazing bargains, or cover expenses when sales are less
than forecasted.
Implementing the recommended cash flow strategies above can build up your bank
balances, extend the number of strategic options available to you as a company, and reduce
the likelihood that you will be forced to make desperate decisions.

23. To download the 16 Secrets to Increase Business Cash
Flow, click here or visit:
http://get.divvypay.com.pages.services/16-Secrets-to-Incr
ease-Business-Cash-Flow/

24. Divvy is the first free and fully automated spend
management platform. To learn how you improve cash
flow, save time, money, and frustration managing your
spend and expenses, contact Divvy at 877.77.DIVVY, visit
www.divvypay.com, or email us at info@divvypay.com.