Three Steps to Increasing Business Cash Flow

How to Increase Cash Flow in Any Business

A healthy business isn’t just about profits. It’s about maintaining steady, predictable cash flow. By evaluating your finances, diversifying income sources, and managing payments efficiently, you can build a more stable financial foundation and protect your operations from uncertainty.

Businesses can’t rely on just profits to survive. What truly matters is cash flow, the money actually moving in and out of your business every day. Without it, bills go unpaid, payroll gets delayed, and growth grinds to a halt.

The good news? With the right practices, you can strengthen your financial position and set your business up to stay cash flow positive. Here are three key steps to get started:

Step 1: Evaluate Your Finances to Improve Cash Flow Visibility

Cash flow is often overlooked, especially when a business is experiencing high profits and rapid growth. However, whether it’s bills not being paid on time, waiting on delayed client payments, or surprise costs due to expansion, not having the cash on-hand needed to cover expenses can lead to serious financial problems. And worse yet, these could have been completely avoided through a proper evaluation of your current finances.

To avoid these unfortunate (and embarrassing) instances, sit down with your finance team and do a thorough evaluation of your finances, and your AR and AP processes. Make sure you not only look at where you stand currently, but at 30-, 60-, and 90-day projections. By looking out in the future, you can see pending bottlenecks or issues that can be addressed now, and save you from heartache and potentially tough and unfavorable decisions in the future.

Step 2: Diversify Revenue Streams to Strengthen Cash Flow Stability

Simply put, having more than one revenue stream can save your business when times get tough. It’s like that old saying “never put all your eggs in one basket.” For small to midsize businesses, the thought of diversifying products or service offerings can seem overwhelming or unmanageable, especially when time is tight and staff is already stretched.

However, it is often this diversification that strengthens customer loyalty, giving them more reason to come back. Not to mention, if you were to miss out on a large deal or lose your biggest client, this additional income will keep you afloat while you work to replace what was lost.

Diversification doesn’t mean chasing every new opportunity, it means thoughtfully expanding in ways that complement your strengths and create more reliable income.

Step 3: Manage Vendor Payments with Accounts Payable Automation

This step circles back to Step 1. After you have thoroughly evaluated your current finances, look for opportunities of improvement in your AR and AP processes. Whether it’s finding ways to shorten time for receiving payments from clients, or negotiating discounts with your most used vendors, proactively managing invoices and spend can go a long way to not only saving money, but ensuring the cash is there when it’s needed.

Upgrading to an automated AP system plays a big part in managing cash flow. Concur Invoice offers an automated, cloud-based solution that is mobile enabled, making invoice management accessible from anywhere. Important approvals or decisions don’t have to wait until managers are back in the office, maintaining the flow of business. In addition, the automated system makes data more accessible, giving the financial visibility needed to make those necessary business decisions and maintain a positive cash flow.

Take Charge of Your Business Cash Flow Management

Understanding and improving your cash flow is one thing that should never be put on the back-burner or the bottom of a to-do list. Pro-active management can save your business from future financial troubles.

These three steps are just a start. There are many more opportunities and possibilities for maintaining positive cash flow. See how SAP Concur solutions for small and midsize businesses can help you get started.

Frequently Asked Questions About Improving Cash Flow

What are the best ways to increase business cash flow?

The most effective ways include reviewing your financial processes regularly, diversifying revenue sources, and managing accounts payable and receivable efficiently.

How does automation help with cash flow management?

Automation streamlines invoice processing and payment approvals, helping businesses avoid delays, reduce manual errors, and maintain steady cash flow.

Why is diversifying revenue important for cash flow?

Diversification ensures your income isn’t dependent on one customer or product, making your cash flow more resilient during market changes.

What’s the first step to improving cash flow for small businesses?

Start by evaluating your current finances and cash flow projections. This helps identify shortfalls early and prioritize areas for improvement.