How to Increase Your Business Cash Flow During a Recession

Running a business during a recession is one of the hardest challenges of the business world. During hard economic times, it’s often very difficult for business owners to make ends meet because costs of supplies, overhead, and interest rates rise, make it harder to turn profits every month.

During a recession, businesses often have to resort to cutting back on employees’ hours or laying off employees altogether. With less manpower running the various business operations every day, it becomes that much harder for the remaining employees to finish up all of their own tasks, in addition to the newly assigned tasks they need to cover as a result of layoffs. When it comes to payroll, employees also see cuts there as well, or they simply go on without the usual raises in pay they would normally expect during a healthier economic environment. Employees may also need to deal with the loss of employer-funded health insurance coverage.

What You Can Do

In order to get your business through a recession, you have to be creative. You may have to put more hours into your job, be confident enough to ask more of your employees than what was previously expected of them, and be brave enough to make cuts wherever necessary in order to spend less and save more, reaping greater profits than you would have if you didn’t make changes.

Sometimes it’s very hard for a business owner to change, especially if he had been successful all along and suddenly finds himself struggling. But if you can challenge yourself to think of creative ways to make your business work, and you can find ways of cutting corners without sacrificing the quality of the products and services you offer, you’ll be one of the lucky survivors.

Tips on Increasing Cash Flow During a Recession

  • Contact customers who are late on their payments to you. Just because you’ve been making sales doesn’t mean your company is thriving if those sales are not fully paid for by customers. Keep track of invoices you send out and make sure your customers adhere to the terms you set forth. Also, if you typically offer longer terms, such as 45- or 90-day terms, consider shortening them to 30 or less.
  • When it comes to paying bills, always ask if there is a discount offered to you if you pay your bills earlier, such as by 15 days rather than 30. If that’s not the case, take advantage of the terms of your bills to buy yourself time to get that money in.
  • Pay your bills and credit cards on time to avoid high late fees and interest fees. And avoid making large purchases if you simply don’t have the funds to cover them.
  • Save on postage by sending invoices and receiving payments via your website.
  • Check where you’re spending the most money and make cuts wherever possible. Look for vendors that offer lower prices and cost-lowering bulk options, cut back on energy use to lower your overhead costs, negotiate your rent and insurance terms if you can, and cut out unnecessary spending.

Use up any excess inventory before purchasing more.

About the author:

Laura is a writer for She likes to provide small business owners with the advice they need to continue running smoothly, even during a recession when many businesses close.

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