9 proven tactics to improve cash flow today
Your cash flow determines whether you can pay bills, meet payroll, and invest in growth. When customers pay late or accounts payable pile up, your liquidity tightens, making even strong profits feel strained.
Effective cash flow management protects your financial health, helping you navigate downturns and maintain stability in daily business operations.
The warning signs often appear weeks before a crisis: Your bank balance drops faster than expected, vendor reminders multiply, or you’re constantly moving money between accounts. Recognizing these issues early lets you fix them before they threaten your company’s stability.
Here, Ramp outlines nine strategies to strengthen cash flow.
Before you start: Build a 13-week cash flow forecast
A cash flow forecast shows exactly when money will enter and leave your business over the next 13 weeks. This window balances near-term accuracy with sufficient visibility to spot upcoming problems. Longer quarterly forecasts often miss critical timing issues that appear week to week.
Start by listing all expected income by week, including accounts receivable, returns on investments, and other revenue sources. Next, map every cash outflow, such as payroll, rent, vendor invoices, and loan repayments. The difference between money in and money out shows your expected cash position each week.
This simple forecast reveals exactly when you'll face shortfalls, letting you take action before problems hit. You'll know which weeks need extra attention and can time major purchases or investments when cash is strongest.
9 strategies to improve cash flow
These tactics focus on accelerating money coming in while thoughtfully pacing money going out. Each one is a practical step you can implement immediately to strengthen your cash position.
1. Invoice the moment work is done
Every day you delay sending an invoice pushes payment further into the future. If your payment terms are net 30 and you invoice a week late, you’re effectively giving customers 37 days to pay, which directly affects your cash flow.
Set up your invoicing process to trigger the moment you deliver goods or complete services. Create templates for common projects, establish clear approval workflows, and automate invoice processing to reduce delays and errors.
Good business accounting software can automate invoice creation and delivery. Schedule recurring invoices to send automatically, set up reminders for one-time invoices, and track which customers consistently pay late so you can adjust their terms.
2. Offer targeted early-pay discounts
Early payment discounts give customers a small price reduction for paying invoices quickly, usually 1%–2% off for payment within 10 days instead of the standard 30. This trade-off can dramatically improve cash flow when used strategically.
Offer these discounts to reliable customers with large invoices where the accelerated cash outweighs the discount cost, and set clear net 30 payment terms in your contracts. For example, a 2/10 net 30 discount (2% off if paid within 10 days) on a $10,000 invoice costs you $200 but gets you cash 20 days sooner.
Avoid overusing discounts. If too many clients expect them, your profits can erode. Reserve incentives for high-value customers with proven creditworthiness and predictable payment patterns.
3. Enforce real-time spend controls
Spend controls are limits and approval requirements that prevent unnecessary purchases before they happen. By controlling outgoing cash in real time, you maintain more working capital for critical needs.
Set spending limits by role and require approvals for purchases above certain thresholds. Implement category-specific limits for discretionary spending, such as travel, entertainment, and office supplies. Expense management software can give you real-time visibility into all your business expenses while automatically enforcing your expense policies at the point of sale.
By enforcing spend controls, you preserve cash reserves and minimize surprise expenses in day-to-day operating activities.
4. Negotiate longer vendor terms
Negotiating payment terms with regular vendors from net 30 to net 45 or 60 keeps cash in your account longer. This added time creates flexibility in your cash management without costing anything if handled well.
Approach long-term vendors you’ve paid reliably and inquire about extending your payment terms, starting with an extra 15 days. Communicate openly about your goals, emphasizing that longer terms let you place larger or more frequent orders.
You can also balance longer terms by offering something in return, such as early-pay reliability or larger order commitments. This strengthens relationships while improving short-term liquidity.
5. Pay with a business credit card to extend float
Float is the time between when you make a purchase and when you actually pay for it. Business credit cards extend this float by 30-45 days while earning rewards on necessary expenses.
Charge recurring vendor payments, software subscriptions, and operating expenses to a rewards card. You’ll keep cash in your account longer and earn points or cashback at the same time. Time large purchases right after your statement closes to maximize float.
Pair this with a line of credit or cash management account to stay flexible if interest rates rise or your monthly payments fluctuate. Always pay balances in full to avoid interest charges that reduce your bottom line.
6. Audit and cut recurring SaaS fees
Automatic renewals for unused or overlapping software subscriptions can quietly drain cash. These recurring charges often go unnoticed across departments, especially in growing small businesses.
Run an audit of all subscriptions by reviewing statements from the past three months. List each tool, its user, and how often it’s accessed. Cancel anything you don't use and consolidate overlapping features.
Automated expense tracking tools can flag duplicate or underused software in real time, helping you streamline costs and maintain a healthy cash flow. Negotiate annual plans only for the tools you know you’ll keep using.
7. Move idle cash to a high-yield savings account
Cash sitting in low-interest checking accounts could be earning money elsewhere. Move excess balances into high-yield savings or money market accounts to generate passive income.
Keep enough in your primary business checking account for two weeks of operating expenses, then transfer the rest into interest-bearing accounts. Choose FDIC-insured options with no minimum balance and easy transfers.
Even $50,000 in idle funds can generate over $200 a month in interest, improving cash flow without operational changes. That interest flows straight to your bottom line and boosts financial health over time.
8. Clear slow-moving inventory quickly
Excess inventory ties up cash that could fund marketing campaigns or new equipment. Every dollar sitting in unsold stock limits your flexibility and cash reserves.
Identify slow-moving products by reviewing items that haven’t sold in 60-90 days. Use limited-time discounts, bundles, or liquidation channels to move them. Even break-even sales can free up working capital.
Modern inventory management systems can pinpoint stagnant stock automatically, helping you take action before too much money is tied up in physical goods.
9. Activate a low-cost line of credit
A business line of credit gives you on-demand access to funds for short-term cash gaps. You pay interest only on what you borrow, which makes it more flexible than a traditional loan.
Secure a credit line when your cash position is strong, not during a crisis. Lenders offer better rates when you have steady revenue and strong financial statements. Compare options from banks, fintech providers, and credit unions to find the best terms.
Use the line of credit strategically to bridge timing gaps between accounts receivable and accounts payable, and pay it off as soon as collections arrive to avoid late fees or excess interest.
Track results with key cash flow KPIs
Tracking cash flow metrics helps you measure whether your tactics are working and gives you visibility into trends before problems arise. Use these KPIs to evaluate performance and optimize your cash flow forecasting over time.
Review these metrics weekly during tight cash periods and monthly when operations are stable. Pair them with your cash flow statement to spot trends in operating expenses, accounts payable, and accounts receivable.
Over time, these insights help you optimize forecasts, anticipate fluctuations, and make better decisions about spending and financing.
Common mistakes that hurt cash flow
Avoiding cash flow missteps is just as important as applying the right tactics. Knowing how to improve cash flow also means recognizing what drains it most.
Each mistake can compound others, eroding your financial health and putting your business at risk. Staying disciplined about collections, spending, and growth keeps cash flow steady and predictable.
- Poor credit management: Extending terms to risky customers slows cash inflows and increases the chance of bad debt. Run credit checks, set limits, and tighten terms for high-risk clients.
- Ignoring seasonal patterns: Spending heavily during slow periods leads to negative cash flow. Use your cash flow forecast to adjust inventory, staffing, and marketing based on demand cycles.
- Over-investing in inventory: Excess stock locks up capital and increases holding costs. Review inventory management metrics monthly to keep stock levels aligned with sales trends.
- Paying bills too early: Settling invoices before their due date unnecessarily speeds up cash outflows. Schedule payments strategically to maintain liquidity without damaging vendor relationships.
- Neglecting collections: Failing to follow up on overdue invoices causes receivables to age past recovery. Automate reminders and follow-up workflows to accelerate cash inflows.
- Growing too fast: Rapid expansion without adequate cash reserves can create dangerous shortfalls. Match your growth pace to your available working capital.
This story was produced by Ramp and reviewed and distributed by Stacker.
