6 Cash Flow Management Solutions For Small Business Owners

Cash is a business’ greatest asset, which is why cash flow management can make or break a small business. Running a smaller-sized supply chain business in particular comes with unique challenges, as it can be affected by market conditions, fluctuations, and changing demand (with fewer resources to address it).

Ensuring proper cash flow management for small businesses becomes possible, however, with the right solutions and systems in place. Let’s discuss some tips and tricks every business should know.

1. Plan a budget that works

Creating a comprehensive budget is the first step to ensuring consistent cash flow. Start by reviewing your expenses, as well as your past and future income. Make sure to account for all expenses, no matter how small, whether it’s administrative, marketing, or material costs.

Write budget assumptions regarding cost reduction strategies, revenue growth, market share, and economic conditions.

Then, identify any risks that could change your estimates. These may include: 

• Competitor actions

• Market changes like recessions

• Operational issues

• Upgrades to facilities

• Staffing challenges

• Customer behaviors

Learning to anticipate successes and challenges will help set your business up for success.

2. Send invoices quickly

Cash flow management strategies for small businesses often emphasize getting paid promptly, which requires that your business send invoices as soon as possible. Depending on your contract, customers may have 30 to 90 days to pay you. The longer they wait for their invoice, the longer you wait for payment. 

Some businesses offer discounts on early payments, but Silo has a better solution that immediately puts money in your pocket. Silo Capital’s Instant Pay provides your business with capital when customer payments are pending. Through this service, Silo instantly advances your business to 90% of the customer’s invoice so you can keep operations running smoothly. 

3. Network and negotiate terms

Another aspect of cash flow management for small businesses is building reciprocal business relationships with clients, suppliers, and vendors. This is vital for establishing payment terms that meet both party's goals and cash flow needs. 

Internally, be prepared to manage and negotiate contact and payment terms with multiple partners to have enough cash flow to cover your business’ bills and expenses.

4. Manage inventory more effectively

Efficient inventory management is necessary, especially for small supply chain businesses that deal with perishables. Understanding how much inventory you carry, where it’s going, and how much you need to fulfill orders will help prevent waste, overstocking, under-delivering, and cash flow issues.

The ability to track cash flow is also helpful for diversifying your produce offerings — the better the cash flow, the more flexibility there is to expand offerings. By understanding the demands of the industry and client requests, your business can consider adding or removing products or adapting to seasonal varieties. 

Understanding cash flow, especially when business is booming or slow, helps adjust your pricing to match market fluctuations. For example, your business could consider different pricing strategies during peak season to maximize revenue. This will help to balance out slower seasons. Offering discounts can also boost sales when there’s less cash flow. 

5. Find ways to streamline operations

Regularly review and audit your operations to help process gaps and identify opportunities to streamline them. This will help you figure out how to effectively improve cash flow.

Understanding every department’s operations can help remove redundancies and allow you to implement new systems to enhance management. For example, businesses that struggle with cash flow management may benefit from automating, outsourcing, and restructuring their current system through the use of technology.

Technology solutions can help to reduce costly human error, improve communication between departments, and help business owners gain much needed insights into their operations.

6. Use a dedicated software 

The global supply chain is always evolving and companies must find new ways to remain competitive. And in an increasingly digitized world, choosing a dedicated software to help you keep up with your competitors is becoming increasingly important.

Leveraging a technology solution to organize your business operations, connect your departments, and surface key data insights help business owners cut out inefficiencies and support a healthy cash flow cycle at your business. 

Take Silo’s Enterprise Resource Planning (ERP) solution, for example, which empowers businesses and helps them scale their operations through streamlined workflows. Silo can help:

• Streamline sales, accounting, and payment reconciliation processes to save time where it matters most

• Monitor lot performance so buyers can track true cost of goods

• Track buying and selling data to enable data driven decision making

• Connect departments to avoid miscommunication and human error

Silo’s inventory and accounting software offers companies the tools they need to make informed data-driven business decisions while increasing productivity and reducing costs.

Book a demo with Silo today to learn more about how Silo can help you manage your cashflow.