5 tips to keep a positive cash flow

Cash flow can become a big problem if you’re spending more than you’re earning. Entering a negative cash flow can cause financial trouble for your business and impede growth.

If a creditor gets the sees that your business might be struggling, it may start demanding full repayments. And if you aren’t honest with your creditor, it might report your situation to a credit agency. From there, things can start to go downhill.

If you fear you may be in this position, follow these tips to learn ways to save yourself before you’re in too much debt.

1. Keep a budget to monitor cash flow

To know what your present cash flow is, you’ll have to draw up a budget. One side will have all the bills you need to pay. The other will have your business’s earnings. To maintain a positive cash flow, you must always have excess in your earnings column. Failure to do something about it now will make it harder when you start missing payments and your credit rating becomes affected.

When you draw up a budget to see exactly where you stand as far as cash flow is concerned and take action to do something about it, even if you get a negative result, you’re exercising effective cash management. This way, you will always know exactly where you stand. Whatever you do, don’t borrow money from any source unless you are certain you’ll always keep a positive cash flow.

2. Keep spending in check

If you’ve been spending money on unnecessary things, you can find yourself up against a financial brick wall. Some people put off paying credit card bills until it becomes too late. The interest becomes extremely high, and the lender deactivates the card while the bill still needs to be paid.

When this happens, you’ll have no choice left but to knuckle down and begin the long, hard road of paying your creditors back. It might change day-to-day luxuries considerably, but you’ll be left with no option other than declaring yourself bankrupt — and that has its own long-term consequences.

3. Track your receivables

You should closely and routinely keep track of your receivables to maintain a steady cash flow. The best way to do this is to create and update a detailed list of how much money you are owed from each customer with dates for each transaction. This can easily help you keep track of any overdue money you have yet to receive, as well as to efficiently keep a short window of time for your customers to pay you back before issuing late fees.

Invoice financing: How to use your accounts receivables to get a loan

4. Boost your cash inflow whenever possible

You should always be striving to increase your cash inflow to help cushion your business against stagnating or falling into debt. There are many strategies you can take to achieve this.

One method is to increase prices on your products and services — but make sure you research your market to make sure you’re not overcharging and driving away customers. This can extend to requiring deposits or advance payments on larger orders, to ensure you have at least some of your payment upfront. You can also cut back expenses on equipment, as well as keep your funds in an interest-earning checking account to let your money grow naturally over time.

5. Don’t accept late payments without penalty

There are many ways your cash flow can dry up, but it can be especially problematic if you’ve been too lenient with payments from your customers.

Some debtors like to hang onto their money for as long as they can. If you have many debtors doing this, your cash flow can dry up. If this is the case, you can do something about it by sending timely invoices and clearly enforcing fees for late payments. A good rule of thumb is to start enforcing late payment fees 30 days after the due date listed on the invoice.

Bottom line: A positive cash flow is simple — don’t complicate it

Being owed money doesn’t mean you have cash in the bank. It isn’t considered cash until it’s in your hand and doesn’t have to be paid back. If you simply have a list of customers who owe money to you, it isn’t cash you have available to spend.

You can take financial responsibility a step further if you decide to be disciplined and only regard cash as spendable after you’ve paid the rent or mortgage, invoices and all other bills. The remaining money is considered yours.

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Name	Product	Interest Rate	Loan Amount	Loan Term	Minimum Revenue	Minimum Time in Business	Loans Offered
SharpShooter Funding Business Loan		Prime pricing from 9.00%	$500 - $250,000	6 - 120 months	$10,000 /month	100 days	Unsecured Term, Merchant Cash Advance, Invoice Factoring	To be eligible, you must have been in business for at least 100 days with a minimum of $10,000 in monthly deposits. SharpShooter provides capital to small businesses that are underserved by banks and credit unions. It measures overall business health and potential rather than focusing strictly on traditional metrics. Fill out a simple application and get pre-approved in minutes. Receive your funds within 24 hours.	Go to site More Info	Compare	loading Fetching your data...
Swoop Funding Business Loan		4.00% - 25.00%	$1,000 - $5,000,000	3 - 60 months	$10,000 /month	24 months	Term, MCA, LOC & more	To be eligible, you must have been in business for at least 24 months and have a minimum of $100,000 in annual revenue. Swoop partners with banks and alternative lenders to match your business with the right funding options. Register for free and browse your offers without affecting your credit score.	Go to site More Info	Compare	loading Fetching your data...
Lending Loop Business Loan		Starting at 4.96%	$10,000 - $500,000	3 - 60 months	$8,500 /month	12 months	P2P	To be eligible, you must have been in business for at least 12 months and have a minimum of $100,000 in annual revenue. Lending Loop is Canada’s first regulated peer-to-peer lending platform. Complete an application in 5 minutes. Once you accept your loan offer, investors will begin to fund your loan on the marketplace. Your loan will be transferred to your bank account when it is fully funded.	Go to site More Info	Compare	loading Fetching your data...
OnDeck Business Loan		8.00% – 29.00%	$5,000 - $300,000	6 - 18 months	$10,000 /month	6 months	Secured Term, Line of Credit, Merchant Cash Advance	To be eligible, you must have been in business for at least 6 months with a minimum monthly revenue of $10,000. OnDeck offers fast and simple financing. Apply in less than 10 minutes with your basic business information and see your loan offers without hurting your credit score. Get approved within 1 business day, and choose your term, amount and payback schedule once approved.	Go to site More Info	Compare	loading Fetching your data...
Loans Canada Business Loan		Prime Pricing from 9.00%	$2,000 - $350,000	3 - 60 months	$4,166 /month	100 days	Unsecured Term	To be eligible, you must have been in business for at least 100 days, have a credit score of 410+ and show a minimum of $4,166 in monthly deposits ($50,000/year). Loans Canada connects Canadian small business owners to lenders offering financing up to $350,000. Complete one simple online application and get matched with your loan options.	Go to site More Info	Compare	loading Fetching your data...

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