An accomplished entrepreneur, Scott Sohr serves as the president of STS Ventures, a startup incubator in Nashville, Tennessee, and as the co-founder of Stonegate Land, Health Cost Solutions, and several additional companies. Scott Sohr began his career while studying at Auburn University and he recognizes that one of the biggest challenges facing startups is getting to positive cash flow.
All successful businesses strive to acquire and maintain positive cash flow, but for those still in the negative, positive cash flow may seem like a faraway fantasy. Following are four ways companies can improve their cash flow quickly and efficiently:
1. Hasten payments: Sometimes, customers take a long time to pay for their services or products, and unfortunately, this can be detrimental to a company’s cash flow. To improve payment times, businesses can start sending invoices out immediately and shorten their payment terms to just 30 days. These changes can be further enforced by offering a discount to customers who pay early.
2. Replace old equipment: Although buying new equipment can be costly at first, it often saves companies more money in the long run. Newer equipment not only operates more efficiently, it is less likely to break down and may reduce energy usage as well.
3. Tighten credit requirements: In the early days of a company, customers may request credit to delay their payments a bit. While there is nothing wrong with offering credit options, businesses must be careful about whom they extend credit to. Before setting up any credit, customers should be carefully reviewed for financial and business history.
4. Improve marketing: Marketing plays a key role in bringing in new customers and improving cash flow, but ineffective marketing is a financial drain. By improving marketing strategy, companies are able to lower their cost-per-lead, expand into new markets, and boost the value of their customers.
