First, and most importantly, work to a realistic business budget. This will help keep cash flow on track and ensure that spending is contained within planned limits.
You never want to owe suppliers more than you have to, and you want to cash in hand to be able to pay them.
Next, make early payments to suppliers who offer a discount – and where you can always negotiate discounts. But then offer the same to your own clients.
Don’t send out invoices at the end of the month – send them as soon as the job is complete, and then start calling for payment and ask for a commitment of when the invoice will be paid.
Examine your supplier and credit terms – you still need to make a profit – but it simply doesn’t make sense to pay suppliers in 30 days and then offer customers 90 days credit.
Another thing you can do is ask for deposits and then order the goods required. You can put that money to good use while you fill the order.
Finally, pay carefully. Choose which bills to pay. Don’t just focus on the smaller invoices. Pay employees first, then pay crucial suppliers. Regularly review when you expect to receive money and pay it out.