05/08/2015

8 tips for improving small business cash flow

Citizens Bank marks Small Business Month with simple tips for small business cash management      

PROVIDENCE, R.I.Citizens Bank is marking Small Business Month by offering eight simple small business cash flow tips.

“Managing cash flow is one of the most important yet under-appreciated challenges faced by small businesses,” said Quincy Miller, President of Business Banking for Citizens. “Companies that have accelerated their receivables, streamlined their payroll and established more-advantageous payment terms and processes with their vendors, suppliers and customers have a definite competitive advantage in today’s marketplace, no matter their business.” 

In many cases, with business owners focused primarily on day-to-day operations, cash flow is only a focal point when there is a problem. But business owners who establish proactive strategies for cash management are able to avoid those problems and create new growth opportunities through reinvestment by making their capital work better for them. 

Consider the following tips to improve cash flow:

  • Understand your operating cycle – Regardless of size, every business must deposit, monitor and manage cash; make payments; fund purchases; invest in their company; and receive payments. Reviewing and understanding each step in this cash flow cycle can help a company work more efficiently.  

     

  • Encourage faster payments – Can you provide an incentive or discount to customers or vendors to encourage them to pay faster? The sooner a payment is received, the sooner you can put that revenue to work for your company. Collections services like lockbox also can help post payments to your accounts more quickly.

     

  • Consider remote deposits - Some banks offer customers the opportunity to make remote check deposits from their mobile device, sparing them trips to the branch. This allows companies to save time and to keep their workforce focused on operations – a benefit of particular importance for companies with only a few employees.

     

  • Review your payroll process – If you pay your employees twice a month instead of every other week, you will be managing 24 payroll periods instead of 26 during the course of a year, making your company more efficient.  Direct deposit of employees’ paychecks into their accounts can also create efficiencies.

     

  • Evaluate real-time wires - If your small business is buying or selling overseas, real-time wires may be an option in lieu of visiting a bank branch. Some banks have the ability for customers to make ACH payments from their desk or office, which saves time and increases productivity.

     

  • Manage outgoing payments in an advantageous manner - Banks can help establish relationships with credit card companies that can speed up payments from customers while giving additional timing or flexibility for repayment to settle your account.

     

  • Look at opening a business credit card – A business credit card has many advantages, including the establishment of a clear separation of business and personal finances. In addition to providing clarity in the day to day operations of your business, this arrangement can eliminate confusion during tax preparations. If you have employees with company cards, consider solutions that allow you to monitor, track and control the way those cards are used.

     

  • Have a Plan B – If you assume you can borrow funds to cover a cash shortfall, be sure to have a loan or line of credit set-up before the cash is actually needed. Waiting until the shortfall occurs leaves you in a ditch as most financial institutions will hesitate to lend money when your business is already in financial straits.

 

About Citizens Financial Group, Inc.

Citizens Financial Group, Inc. is one of the nation’s oldest and largest financial institutions, with $136.5 billion in assets as of March 31, 2015. Headquartered in Providence, Rhode Island, Citizens offers a broad range of retail and commercial banking products and services to individuals, small businesses, middle-market companies, large corporations and institutions. In Consumer Banking, Citizens helps its retail customers “bank better” with mobile and online banking, a 24/7 customer contact center and the convenience of approximately 3,200 ATMs and approximately 1,200 Citizens Bank branches in 11 states in the New England, Mid-Atlantic and Midwest regions. Citizens also provides mortgage lending, auto lending, student lending and commercial banking services in select markets nationwide. In Commercial Banking, Citizens offers corporate, institutional and not-for-profit clients a full range of wholesale banking products and services including lending and deposits, capital markets, treasury services, foreign exchange and interest hedging, leasing and asset finance, specialty finance and trade finance.

Citizens operates through its subsidiaries Citizens Bank, N.A., and Citizens Bank of Pennsylvania. Additional information about Citizens and its full line of products and services can be found at www.citizensbank.com.