Turning on the tap to increase your liquid assets can empower you to tackle your daily operations and long-term goals alike with greater confidence.

However, according to the banking and financing service Pathward, approximately one in three small businesses struggles to maintain access to healthy cash flow. If you’re eager to boost yours, follow these steps for unbinding liquid funds and investing them more lucratively.

Calculate your currency

To start, it’s vital that you put your finger on your company’s existing capital. Run a cash flow statement from your accounting software, or request it from any external services you’ve hired. This form quantifies in detail the funds you receive from your operations, investments, and any additional income sources as well as how much you spend and borrow. What remains is the amount of cash available to support your operations and objectives.

While you should be reviewing this report at least quarterly, you can procure it anytime to gauge how well you’re managing your organization’s assets. Just be mindful of your timing; if you generate one right before a due date for customers to pay their invoices, for instance, you may see a lower-than-normal figure.

Set your sights

You may be curious as to what represents a healthy cash flow, especially if you are entering a novel business venture. Unfortunately, there isn’t a solid figure or percentage to shoot for. The primary aim for any company is simply to hold a positive amount of cash flow—and, of course, the larger the number, the better. This is especially true if you have certain investment-heavy goals, such as hiring more personnel and purchasing complex equipment. You should endeavor to possess more cash than you expect to need in up-front costs and monthly payments; that way, you can feel confident pursuing these objectives while also continuing to fund your daily operations.

Let it flow

Whatever your vision, there are various routes for catapulting your cash flow, ranging from minor adjustments to broad overhauls of your practices. Consider pursuing these strategies sequentially, aiming to free up cash with each one.

Submit timely payments
While paying your vendors technically depletes your funds, being a good customer may benefit you long term, primarily by preventing potential late fees. Demonstrate that you’re a reliable patron, and you may even be able to garner discounts or loyalty rewards. Additionally, pay down as much of your credit card and loan debt as possible rather than only making base payments. This will reduce the total you pay to creditors in interest over time—and safeguard your credit score from taking a hit.

Seek timely payments
Much of your cash may be tied up in unfulfilled payments. To settle this crisis, initiate a consistent routine for pursuing past-due clients. For example, consider pulling up an accounts receivable report every Friday morning and Monday afternoon and sending emails or making phone calls to the highest balance holders. Also, pursue ways to avoid these delays in the first place, which could include offering incentives like earlypayment discounts or sending free gifts for enrolling in autopay. Make these perks clear in your invoices, e-commerce shop, and email footers. And for even greater expediency, adopt accounting software that automates invoicing to ensure that nothing gets overlooked or lost in the shuffle.

Slash expenses
This is a crucial step for any business, even if you are currently satisfied with your cash flow. Review your most burdensome costs, then seek avenues to reduce them, such as by researching new suppliers or utility providers and swapping to lower-cost alternatives. Another option is inspecting your inventory and ordering records to identify and correct any wasteful practices like overordering. Labor costs may be particularly striking as well, so ensure that this expense is as efficient as possible; however, focus on efforts like retraining your team to boost their productivity and eliminating wasted manhours, only cutting staff as a last resort.

Restructure your debts
Debt repayments can drain a large quantity of currency, especially if your minimum payments and interest rates are high. As noted previously, paying extra can help, but it may also be worth considering refinancing your loans or consolidating your debt, which can possibly free up more money each month. As Emma Woodward writes on Bankrate.com, “Refinancing your small business loan can help you take advantage of changing circumstances and save money on your loan. Refinancing may make sense if better interest rates are available.” You may need a good credit score to qualify, though, and you’ll want to review the terms of these agreements to ensure that any loan fees don’t outweigh your potential savings.

Raise prices
If the rigors of both economy and industry are burdening your capital, increasing the prices of your goods or services can unquestionably improve your profit margins and, consequently, your cash flow. Research your rival organizations’ rates to gauge what room you have for hiking costs, making sure you remain competitive. Needless to say, these increases will likely displease your customers, so only resort to this solution if absolutely necessary. To mitigate such uproar, communicate these changes openly and promise an increased commitment to offering quality customer service and products as appreciation for their continued patronage.

Get assistance
Ultimately, you may find it necessary to enlist help with improving your financial health. If you don’t currently work with one, an accounting service may offer numerous benefits, including aiding you in tracking your payments and expenses, keeping you clued in to your cash flow, and guiding you toward informed decision-making. Further, weigh the advantages of hiring at least a part-time or “fractional” CFO, who can assist you in crafting prudent fiscal strategies. Simply indicate to them that you would like to improve your cash flow, and they can strategize with you to frame solutions that cater to your company’s unique needs, goals, and industry challenges, such as cost-of-goods inflation.

As a small-business owner, many responsibilities may tug at your collar. But if you prioritize increasing your cash flow, you can infuse your organization with the capital it needs to adapt to consumer demands, expand its customer reach, and grow into its full potential.

TAKE ACTION:
Run a cash flow statement, and identify at least three routes you can pursue to improve this figure.