Effective cash flow planning is crucial to the success of any small business. Here are five strategies that can help improve your business’s cash flow:

1 Tighten up receivables.
An effective way to increase cash flow is to ask for a deposit. You might request that 20%, 30%, or 50% be paid down when clients place an order with you. To speed up cash flow even more, accept only cash or credit cards, rather than cheques.

2 Extend your payables.
The management of your payables and expenses is an important part of keeping track of your cash flow. When you buy something from your supplier, but don’t pay for it immediately, you’re creating an account payable. These accounts are usually due within 30 to 90 days, depending on the terms agreed upon. Using this “payable period” can slow down your business’s cash outflows. You can also extend your purchase payments by 21 days by using the TD Business Visa^* card. Other benefits of using this card include a monthly management report that lists the expenses of individual cardholders as well as totals for each employee.

3 Minimize your paperwork.
A service like Advantage One offered by TD Canada Trust, can help reduce the paper burden. With the Advantage One service, all your Visa, MasterCard^®, and Interac^** deposits go directly into one TD Canada Trust business account. That means you no longer need to operate separate accounts at different financial institutions, and you won’t have to transfer MasterCard funds to your main business account. This can help you improve your cash flow and reduce service fees.

4 Establish a commercial line of credit.
Contact your bank for a line of credit to cover any cash flow shortfalls. This will allow you to pay your debts on time and will also help to establish a good credit history. Apply for a small credit line at first, not more than $5,000, and make sure you pay off the balance every month.

5 Make your money work for you.
If you’re simply letting your surplus money sit in your business bank account, you’re not making it work for you. Your money can earn a higher rate of return in term deposits and Guaranteed Investment Certificates (GICs). Most GICs provide guaranteed rates of return and they are available for terms as short as 30 days. If you need quick access to your funds, consider a money market mutual fund instead. Returns may be less than the guaranteed rate of GICs, but you have access to your cash when you need it. For more information on investing surplus cash and financing your business, contact yourTD Canada Trust representative.

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Do away with paper

Switching from paper-based processing to electronic processing for your card payments can save you time, energy, and supplies. It can also help you serve your customers better. Here’s how:

• Save time. An electronic point-of-sale terminal eliminates the need for paper credit card slips and manual transaction approvals. This means you no longer have to wait on the phone for authorizations, and can serve your customers more quickly. As well, deposits will appear in your account as soon the same business day, saving you a trip to the bank.

• Reduce expenses. Cutting down on the number of paper transactions can reduce the fees you pay. You could also be offered a lower merchant discount rate, which means even more savings.

• Improve customer service. An electronic point-of-sale terminal gives your customers the option of paying with a debit card instead of their credit card. Canadian shoppers love Interac Direct Payment,^** and used it more than 1.96 billion times in 2000¹.

To find out how an electronic point-of-sale terminal can help your business, call TD Canada Trust Merchant Services at 1-800-363-1163.

1 Bank for International Settlements Report, 2001

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