A Calgary business owner cannot survive without adequate cash flow, even if it makes a profit at the end of the year. Almost 50 percent of small businesses are affected by occasional cash flow problems, while a further 20 percent have a continuing problem with cash flow, according to a report released by American Express Small Business Monitor. The report further stated that the area small business owners struggle with the most is accounts receivable. If your small business experiences cash flow or A/R problems, here are five ways to address and improve these issues.

Sell Assets That Are Not Used Regularly

Does your business have any assets that it no longer uses on a regular basis? You may, for example, have a delivery vehicle that is only driven at busy times or a printer that is no longer used because you bought an all-in-one printer, scanner, and copier. Boost your business’s bank account by selling all the assets you no longer require and hiring vehicles, equipment, and other assets that you only need occasionally.

Reduce Overhead Expenses

Look at how much your business spends on its monthly overhead expenses, including rent, energy, Internet and telephone costs. Look for better deals in each of these areas. Reducing your expenses in just one or two of these areas could lead to a significant improvement in your business’s cash flow.

Hold a Clearance Sale

img source: Pen & Trophy

If you have a lot of unsold items in stock, hold a clearance sale to liquidate this inventory. Although you will have to sell items at a discount, the money earned will improve your cash flow. In the future, look at ways to ensure that you do not purchase too much inventory.Other solutions for inventory control would be to withdraw products that are slow to sell or install a just-in-time ordering system.

Change Payment Terms

Having invoice payment terms of 30 days or longer can adversely affect your business’s cash flow. Consider changing your payment terms to 7 or 14 days. If appropriate, you could ask for up-front payments from new customers or customers who are habitually late paying their invoices.

Offer Early Payment Incentives

Offering a discount or other incentives to customers for paying invoices within a certain number of days, could also help boost your cash flow. Something as small as offering a 2 or 3 percent discount if an invoice is paid within 10 days, could increase your collection rate and in turn, cash flow. Remember, not all of your customers are end users. Like yourself, they could be small business owners looking to cut costs wherever they can!

Calgary businesses that deal effectively with cash flow problems are more likely to build up cash reserves. This liquidity is what helps them survive the months when their outflow of cash exceeds their inflow. Take steps today to ensure that your business improves its cash flow.