In simplest terms, cash flow can be understood as either positive or negative. Positive cash flow is money that comes into your business. This comes from sales or accounts receivable. Negative cash flow is money that goes out of your business. This is the money you spend to keep the business operating, such as for accounts payable, salaries, and other expenses. The goal is to ensure that your positive cash flow is always more than your negative cash flow, which gives you profit for the business.

Creating consistent cash flow for your business is beneficial because it keeps your business operating smoothly. Usually, that means increasing your positive cash flow and making it more consistent. There are a few ways you can create consistent positive cash flow for your business.

Collect what you are owed

When you make a sale, it is counted toward your profit on your profit and loss records. However, until you actually collect the money from the sale, that money is not part of your cash flow. If you have outstanding accounts or have given flexibility to customers for payments, you may be causing problems for your consistent cash flow. Make sure that customers pay their invoices so the money from your consistent sales can be part of your consistent cash flow.

Increase sales

When creating a budget, you decide how much you need to make in sales in order to stay in business. If you need more consistent cash flow, increasing your sales will provide the company some financial padding for your cash flow, especially if you have trouble collecting money from customers after sales.

Consider a short-term loan

Short-term loans can give your business a boost of cash while you’re working on other solutions to your cash flow problem. It is not a long-term solution, but can give your company a break so you can get back on track with your financial strategy.

For a loan to increase your cash flow, contact JNI Commercial Lending today.