Cash Flow is the intersection where profitability is measured across all parts of the business.
There are a few specific ways to improve cash flow:
- Increase price
- Look at how competitors are pricing similar offerings
- Get feedback from customers on what they would be willing to pay
- Test a price increase (you can always pull it back to where it is currently)
- Monetize excess capacity
- Rent out unused resources
- Accelerate accounts receivable
- Ask for those who owe you money to pay sooner (even offer them a small discount if helpful)
- Delay accounts payable
- Ask for more favorable terms to delay when cash is required
- Minimize taxes
- Work with your local accountant to determine what opportunities may exist
By identifying the symptoms of bottlenecks in the areas of your business, we can identify potential solutions to alleviate constraints.
Apply it to your business (fill in the blank with one of the tactics above):
- If I were going to _________ right now, where would I start?
- How have I found ways to _________ in the past?
- Who in a business/industry similar to mine would I be able to ask about _________?
- How could I inexpensively and quickly test _________?
- When can I commit to testing _________, and how will I know if it’s working?
For more specific accounting insights, we've found this YouTube channel to be super helpful: