6 Ways To Keep Your Business Cash Flow High

Cash is king in the business world. Even the most profitable businesses will only work with good cash flow operations. However, everyone has expenses and needs to make investments in future growth. How can you ensure you have enough cash to keep things running smoothly without missing out on opportunities? These six strategies should help.

1) Get a Line of Credit

A line of credit can help you to pay for expenses even when your cash inflow is reduced. For example, if you have slower sales for a month, you may be worried about keeping up with your expenses. This could harm your ability to invest in other projects. In the worst-case scenario, slow sales may even cause you to miss some bills. In other words, it would be bad for your cash flow. Fortunately, getting a line of credit can give you a safety cushion. It can be there to help you get funds when you need them.

How it helps cash flow:

• Covers short-term cash shortages
• Helps pay for unexpected expenses
• Prevents disruption in operations
• Ensures timely payroll and supplier payments

How to secure a line of credit:

• Maintain a good credit score
• Keep strong financial records
• Establish a relationship with your bank or lender
• Consider alternative lenders if banks reject your application

💡 Pro Tip: Secure an LOC before you desperately need it to get better terms.

2) Budget Ahead and Maintain a War Chest

Budgeting helps protect your cash flow a lot. The better your financial operations are, the less risk there is. Of course, it is always susceptible to potential setbacks or mistakes in your projections.

Maintaining a comfortable cash supply ensures you are always ready to keep your business running smoothly. For example, if you always have enough cash to cover at least the next few months of expenses, you don’t have to sweat a slowdown.

Cash flow problems often arise due to poor financial planning. Creating a detailed budget that forecasts income, expenses, and financial needs helps businesses stay prepared.

How to improve cash flow through budgeting:

• Forecast revenue and expenses for at least 12 months
• Set aside a "war chest"—a cash reserve for emergencies
• Identify seasonal trends and plan for slow periods
• Regularly review and update the budget

How to build a war chest:

• Save 5-10% of profits monthly
• Cut unnecessary costs and reinvest the savings
• Keep a mix of cash and liquid investments

💡 Pro Tip: A good war chest should cover 3-6 months of operating expenses.

3) Leverage Invoice Factoring

Invoice factoring is a great way to bring in cash when you are short. This is a straightforward but powerful financial tool. The process involves selling your current invoices to factoring services. You get money now for your accounts receivable. The factor is then collected from your customers.

This is particularly valuable if you need help with customers being slow to pay their bills. You can leverage factoring to avoid waiting to get paid for your goods and services.

If your business relies on invoices for revenue, late payments can create cash flow gaps. Invoice factoring allows you to sell unpaid invoices to a third party (factoring company) in exchange for immediate cash.

How it helps cash flow:

• Converts invoices into instant cash
• Eliminates waiting periods for payments
• Provides predictable cash inflows

How invoice factoring works:

1. You issue an invoice to a client
2. A factoring company buys the invoice (at a small discount)
3. You receive up to 80-90% of the invoice value upfront
4. When the client pays, you receive the remaining balance (minus fees)

💡 Pro Tip: Use invoice factoring if you have high receivables and need faster cash.

4) Focus on High-Margin Products and Services

Examine your margins on each of your products. Are some cash winners and others losers (or more minor winners)? Which ones are helping you maximize your cash flow, and which are holding you back?

This analysis could help you optimize your business’s money-making abilities. If you constantly struggle with cash flow, try adjusting your product and service lines to bring in more money. This could be as simple as marketing your high-margin products more.

Not all products and services bring the same level of profit. To keep cash flow healthy, prioritize selling high-margin offerings that contribute more profit per sale.

How to identify high-margin products/services:

• Analyze profit margins on each product/service
• Track customer demand trends
• Upsell premium versions of products
• Bundle services to increase total revenue

💡 Pro Tip: Regularly review your product mix and phase out low-margin or low-demand items.

5) Revisit Your Payment Terms

Do you offer your customers time to pay you? Payment terms are standard, especially for business-to-business operations. However, they can hold you back if you always wait 30 or more days to get paid for goods and services. This can be a huge cash flow problem. So, try renegotiating your terms. Alternatively, offer a small discount for paying within 10 days, for example. Also, consider auditing your suppliers to ensure that they can meet earlier payment deadlines. You can do this by using a tool with which you can check my business credit score or the scores of other businesses, including your suppliers. If any supplier comes back with a low score and often leaves it until the last minute to pay, you should begin looking to replace them. By ensuring that you only partner with 'credit-healthy' businesses, you give your own business more wriggle room when attempting to speed up the invoice-clearing processes. 

Additionally, consider renegotiating your terms with suppliers. If you can get more flexibility, you can ensure better cash flow.

If your customers are slow to pay, your business suffers from cash flow delays. Adjusting payment terms can speed up incoming cash.

How to improve payment terms:

• Offer early payment discounts (e.g., 2% off if paid within 10 days)
• Shorten payment cycles (from Net 60 to Net 30 or Net 15)
• Require upfront deposits for large projects
• Automate invoicing for faster processing

💡 Pro Tip: Use digital payment options (credit cards, PayPal, etc.) to reduce friction in payments. 

6) Reduce Wastage

How often do you lose inventory? Are supplies expiring while they are sitting on shelves? Do things get lost in the hustle of your daily operations?

Examining your product and supply wastage will help optimize your operations and improve cash flow. The closer you utilise 100% of your inventory, the better your cash position will be.

You can apply the same logic to a service business. Take a look at how much time your team is wasting. They may need to spend more time travelling to clients. Find ways to minimize lost time.

Wasted resources—whether in inventory, operations, or spending—directly impact cash flow. Cutting unnecessary expenses can free up cash for growth.

How to reduce wastage:

• Optimize inventory management – Avoid overstocking and invest in fast-selling items
• Review subscriptions & expenses – Cut unused software, office supplies, and travel costs
• Automate processes – Reduce labor-intensive tasks with automation
• Negotiate with suppliers – Ask for bulk discounts or flexible payment terms

💡 Pro Tip: Conduct a quarterly expense audit to eliminate waste.

Learn More

Discover more about optimizing your cash flow. No matter what industry you are in, your business needs to keep cash coming in to be successful. Your business prospects will also improve as you improve your cash flow operations. Maintaining high cash flow is critical for business survival and growth. The key is to be proactive, anticipate cash flow gaps, and take action before issues arise.