Manage that Cash Flow

Insight from Anil Grandhi and Daniel Groves 

Cash flow. 

Fun to say, right? Makes me think of a river of money.

The reality is, if you don’t manage it right, that river will dry up pretty quick.

Now, outside of the obvious (make more and spend less 🧠), there are some adjustments that most businesses can make when they find themselves in a tight cash position.

Here are a few tips we gathered:

• Leverage depreciation: Use bonus depreciation or Section 179 deductions to front-load an expense on capital assets. This reduces the amount of tax you owe right away, putting more cash back into your business that you can use for other needs.

• Negotiate better payment terms: Take a look at your supplier accounts and see if you can extend payment terms—say, moving from 30 days to 60. You can also offer your customers a discount for paying upfront, creating a win-win for both sides.

• Set aside a cash reserve: Always have money set aside for a rainy day. Aim to set aside 3-6 months of expenses.

• Strategic debt management: Know which debts work in your favor—like tax-deductible interest on business loans—and which don’t, such as dividends on equity.

Learn more: 7 more strategies for managing cash flow