3 Tips for Smarter Cash Flow Management Ensuring more money is coming in than going out is sometimes easier said than done. Keep these strategies in mind to help keep your business in the black.

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In normal times, cash flow is important — in volatile ones, it can be the difference between whether the lights stay on or not. While larger corporations have other financing tools at their disposal, "for a small business, you need cash," says Norah Coelho, senior director of Global Merchant Lending at PayPal.

These are not stable times. The pandemic has thrown a giant curveball at entrepreneurs, forcing companies across the country to shut down for extended periods. As a result, many owners have been forced to think differently — and more resiliently — about managing cash flow.

Below, Coelho shares strategies for bringing money in more seamlessly as well as managing cash flow.

1. Prepare for the expected and unexpected.

Launching and running a business will deliver plenty of both. Start by categorizing fixed expenses, such as rent, inventory, and payroll, Coelho advises. Next, anticipate unexpected expenses by setting money aside for everything from floods to health issues. Coelho has spoken with multiple business owners who have paused operations temporarily to receive treatment or care for a sick loved one.

Life has a habit of creating surprises. Take social distancing requirements: an important health measure that has been costly for small businesses but that few could have probably imagined. "Printing, laminating signage, tape — that all costs money," Coelho says. What's more, "requirements for how to operate a business during the pandemic are changing so frequently. We've had customers say, "I just spent a thousand dollars on signage, and then the rules changed.'"

2. Automate invoicing.

Having enough cash on hand to pay for the dozens of expenses that keep your business going is critical. It's therefore vitally important to ensure you're getting paid on time.

One simple way to help do this? Automate your invoicing process, which will make it easier to send, keep tabs on, and receive payments from customers. What's more, moving from manual invoices to an automated system saves time. Time technically isn't money, of course, but it's the next best thing: freeing up hours once spent on administrative tasks allows you to focus on higher-priority goals that will pay off in the future, such as winning new clients, implementing cost-saving strategies, or developing new products or marketing campaigns.

The ability to focus on long-term strategy "means you have more breathing room," Coelho says. "The day-to-day cash flow becomes a little less exposed to hiccups along the way."

3. Consider alternative lending.

As the pandemic has proven, even the best-laid plans aren't always enough to predict and prepare for unexpected expenses. "The seasonal ebbs and flows or cyclical ups and downs, those can be really pronounced and quite painful," Coelho says. For new businesses beholden to a supplier for inventory but short on cash (or a solid credit history), there aren't many options.

This is where alternative lending programs like PayPal Working Capital* can come in. Accessing financing through PayPal, for example, allows a business to obtain financing that is paid back through a percentage of future PayPal sales,** helping businesses to maintain and grow operations while understanding exactly how much they owe. An infusion of capital can also save money for your company down the line by creating new opportunities. For example, there's a reason large companies buy inventory in bulk — doing so typically comes with better rates, which improves your margins. With a PayPal Working Capital, small retailers have the ability to do the same.

Or take a British vendor that sells tools and ingredients for making specialty cocktails. Batches of inventory arrive from overseas with unpredictable delivery dates. The company didn't always have the funds arranged to immediately collect the inventory to a warehouse, and those delays rack up extra customs charges. With help from PayPal, the company was able to access business financing that enabled it to seamlessly pay for a transfer to a warehouse, allowing it not only to reduce costs, but to start selling goods more quickly.

Bottom line, do whatever you can to expect the unexpected, and take measures to make sure you always have a source of cash for when you need it most.

Visit PayPal to learn more about smarter cash flow management and merchant lending options.

* The lender for PayPal Working Capital in the United States is WebBank, Member FDIC.

** Minimum payment required every 90 days.