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5 Ways To Boost Your Business' Cash Flow First off, are you selling your products for too little? Increasing their price may increase their perceived value.

By Thomas Smale Edited by Dan Bova

Opinions expressed by Entrepreneur contributors are their own.


Business is a game of revenue, profits and expenditures. If those metrics are out of balance, sustaining a business will prove difficult. Even if your projections show a rapid increase in profits in the next four months, you may not be around long enough to witness them.

Related: 4 Tips for Revving Up Revenue When You Need It Most

The challenge: You have to make enough money to stay open during that time, no matter how rosy the future opportunities you foresee for your company.

This is where cash flow comes in. It needs to be optimized, which doesn't just mean increasing your revenue (though that might be a piece of the puzzle). Rather, cutting costs, speeding up invoicing and earning interest on your various accounts are the factors that will play the biggest part in keeping your business afloat.

Here are five ways to boost your cash flow to do that:

1. Reevaluate and fine-tune the pricing of your products.

Are you selling your products for too little? Could you be selling them for more?

You may be concerned that your sales will suffer if you raise your price too much, and that is always a possibility, but it's best not to come to any preconceived conclusions without first testing and finding out what the market can bear. This is especially important when running an ecommerce business, where you have physical inventory you must first invest in.

When you increase the price of your products, their perceived value also tends to rise. Customers who haven't been taking advantage of your offerings may be more inclined to make use of them if they require a larger investment at the outset.

If your pricing is too affordable, you won't be taken seriously. But if your pricing is too expensive, you will lose some business to competitors. So, you have to recognize that a lot of margin sits in the happy middle and that your task is to find a price point that helps boost your cash flow while not resulting in lost sales.

2. Replace old equipment and inventory.

Old equipment takes up space and is inefficient, to boot. For example, print devices can quickly become outdated and incompatible with the latest technology.

With many companies moving from desktops to laptops, and laptops to mobile devices, the replacement process can be frustrating. Managing, maintaining and repairing multiple brands and models is costly, since each requires its own proprietary toner or ink cartridges. In addition, your team has to be trained in usage and maintenance on each new machine .

Leasing devices, therefore, can be cost-effective, since you'll always have the latest technology available at your fingertips, and because newer devices are more power efficient.

But whether you're dealing with equipment or inventory, if either one is obsolete, not working or not being used, you'll need to replace or eliminate it entirely, as it is just taking up space. In some cases, too, selling old equipment can also result in taxable gains, another way to boost cash flow.

Old inventory, however, isn't likely to be worth anything, especially as you continue to update your physical products. Don't hold on to surplus unless there is a good reason to. Consider running a blowout sale if your older products still have value, and use a comprehensive inventory management system to keep track.

Related: Why Your Business Needs Cash-Flow Yoga

3. Re-negotiate long-term contracts.

Do you have long-term contracts with suppliers and service providers? Most businesses make use of a variety of tools to keep their businesses running smoothly. Even small expenses can add up as you begin paying for dozens of subscriptions.

But there may be an opportunity to re-negotiate contracts with companies with whom you have an established rapport. If you know that you're going to be keeping those companies on over the long haul, you can approach them with a new, more cost-efficient arrangement.

Many of those businesses will be willing to work with you if they know they'll be able to keep you as a customer for several years to come. That's an advantage for them, since they won't have to check in every month to see if you're going to renew.

Not all providers will be willing to make changes to your account, but as you contact them, you may discover that you have add-ons or extras you no longer need. So, you can improve cash flow that way: by cancelling services you aren't using.

4. Create incentives for early payments and penalties for late payments.

For many businesses, invoicing is a painful process that sometimes requires a lot of back and forth. If you find it difficult to keep your clients accountable and loathe having to follow up when they're late in paying, you may find it's time to implement an incentive and penalty program.

For instance, discounts could be applied to any account paid early or on time, and interest could be added to any invoice that has gone neglected for too long. These moves will encourage your customers or clients to get payments to you early, thus immediately improving your cash flow picture.

There are multiple benefits here, since not only will more of your customers pay early or on time, you'll actually be able to save on the time and resource costs of constantly having to confirm that payments have been received.

5. Improve your marketing.

Any improvements you can make to your business will ultimately lead to better cash flow. Marketing, in particular, is a key factor.

The reason is that improving marketing reduces your cost-per-lead, boosting the lifetime value of your customers and opening up untapped markets.

Are you having trouble fostering trust and gaining credibility with your customers? It may be time to implement a content marketing initiative that educates your leads, improves your conversions and boosts your company image, especially online.

Are you interested in upselling but don't know what products to create? Survey your customers, or have a third-party consultant conduct customer interviews to determine what your next offering should be.

Final thoughts

If you're experiencing cash-flow problems, you'll want to take an honest look at your business and how you're running it.

Your business infrastructure needs to be monitored and tweaked regularly. This is not a set-and-forget exercise. When you're tempted to blame your customers, be willing instead to examine how you're allocating your money, and determine what changes might be made.

Related: The 5 Worst Cash-Flow Mistakes Small-Business Owners Make

Using the strategies outlined above, you'll be able to speed up your cash flow and position yourself to win in the game of business.

Thomas Smale

Entrepreneur Leadership Network® Contributor

Founder of FE International

Thomas Smale co-founded FE International in 2010. He has been interviewed on podcasts, blogs and also spoken at a number of industry events on online businesses, exit strategy and selling businesses.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

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