Improve Your Small Business Cash Flow

small business cash flowIf you run a small business, cash flow can sometimes be an issue.  If you’re working on a big project, income may not always line up with expenses.  If you had to extend a line of credit to a buyer, you may be Net 90 before your cash comes in, but in the meantime you have payroll and other obligations to meet.  Whatever the situation, it is essential that you maintain a good reserve of cash.  Here are some ways to boost your cash flow if you find yourself in this situation.


Getting a Loan

The first thing to consider is getting a loan.  If you run a business, you may be able to qualify for great lending rates through the Small Business Administration (SBA).  Most SBA loans are actually done through your local bank, so if you maintain a good relationship with a bank, they can help you through the loan process.  Having a loan or other line of credit can really help you maintain the necessary cash reserves.

Another option, if you don’t necessarily qualify for an SBA loan, is to get a peer to peer loan.  Sites like Prosper allow anyone to post what they want a loan for, and many small business owners do post their lending needs on the site.  You can use Prosper to get a 3 year loan, and the interest rate can be good if you have good credit.  Starting a small business can be financially challenging. However, while trying to finance your next great idea there may be the option of accounts receivable lenders to help finance the start up of your business.


Using Invoice Factoring

If you don’t need a long term loan, but just need something to cover you until your invoices get paid, you may want to consider invoice factoring from a company like    Unlike getting a loan, invoice factoring involves another company buying your accounts receivable (or unpaid invoices).  In exchange for a discount to face value, you can get a lump sum of cash today, and let the invoice factoring company handle collecting and following up.  This can not only save you time and resources, but it can give you the cash you need to get through.


Any other tips for improving business cash flow?

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  1. I would not recommend getting a loan for your business, unless you need a really large amount to expand. I would rather save a portion of my profit each time until I can have the sufficient amount for my expansion.


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