Does your business suffer from cash flow problems? Many small companies underestimate the value of improving their cash flow. But this one step can help the business save money, build better relationships, and grow in new areas. And failure to prioritize cash flow can have a domino effect in negative ways as well. Not sure how boosting cash flow will help you? Here are three key ways.

1. Fewer Fees

When you have to rely on credit — either formal credit lines or simply pushing back payment to vendors — you pay a cost. Vendors often charge between .5% and 5% of balances still unpaid beyond the established invoice terms. If you use a company credit card that can't be paid off each month, you could pay triple that interest or more.

But when you can pay vendors according to their terms, you won't have to pay these added fees and charges. Not only does this save money, but it also makes financial planning easier because you will know your expenses better.

2. Better Credit History

Businesses need to maintain a good credit history just like individuals do. And when your company fails to pay debts or obligations on time, it damages that credit.

Poor credit leads to similar challenges as for individuals, including denial of credit with certain companies and less favorable credit terms. You may be limited to certain vendors and certain prices as well as being charged more for credit from banks and lenders. However, when you have a good reputation, you have more room to negotiate prices and discounts along with other contract terms.

3. Ability to Compete

The best way to compete in the marketplace is to have a solid credit history, a good reputation, and cash to spend when needed. This allows you to make purchases in bulk for better pricing and to be able to take on larger jobs with more upfront costs. It also means you won't be forced to take jobs that contribute less to your bottom line just because you need the fast payment. 

Which of these improvements could your company benefit from the most? It might be fewer unnecessary costs, the ability to negotiate with more strength, or having more control over which jobs you can take on. Whatever your needs, taking steps to keep a good cash flow will help fulfill them. Need help finding ways to do that? Start by contacting a financial consulting service. 

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