Managing Your Company’s Cash Flow On A Shoestring Budget

When bootstrapping your new business – making it pay for itself instead of borrowing operating capital or to make you borrowed capital go farther – knowing how to stretch a dollar is very necessary. The following tips help small business owners improve their cash flow and keep their expenses manageable.

1. Use your credit line to your advantage. Even if your credit is not what a bank needs to see to extend credit, it is probably more than enough to get credit lines established with your suppliers. Even a small credit line opens the door to business and with prompt payments typically leads to greater extensions of credit in the future.
2. Try to negotiate payment terms. Normal terms are net 30, but some suppliers will allow a discount for early payment. If the nature of your business demands and you are dealing with a large supplier it may be possible to negotiate a 45 days instead of 30.
3. Limit and time your asset purchases. When outfitting your office, be it computers, software, or printers, find the best pricing, if possible wait for sales and then time your purchase so you are not paying for an item months before you actually use it to make money. Also, when beginning, many times older versions of software do the job just as well as the latest version, but for less money. Also, with the growing shareware and freeware, usable software for everything from graphics, web creating and office suites is available online. One caveat is to beware of free software that has advertising or spyware attached – it is never worth the headaches.
4. Use your credit cards to your best advantage. With an eye to keeping balances below 50%, using your credit card can earn you reward points that can be translated into free air miles or hotel stays for your business trips. Your credit cards might also be used to turn a 30 account into a 50 day account by paying your supplier on the due date with your credit card and then paying the credit card bill when it comes due.
5. Explore the barter economy. Trading services for services or products for services in a win-win deal can help both businesses. These successful partnerships can also bring in referral business. In this way, neither company has to outlay cash to achieve their goals, but both businesses benefit in monetary ways from the service provided.

Using these five ideas to help get creative with how you manage your cash flow pays off over time by increasing your cash on hand and keeping your interest on expenses to a minimum.

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Filed under: Alternative Capital, Business Solutions