How To Improve Your Small Retail Business’s Cash Flow

Cashflow is more about regularity than amount. What you want is money going out of the business at about the same rate as it comes in. If your money goes out too quickly, you may find yourself with a shortfall even if you are expecting more money later that would cover it. If it goes out too slowly, you can easily get an overinflated sense of how much you really have to spend.

Cashflow is also about predictability. If you run a magazine or newspaper, you would much rather sell each paper at a significant discount to obtain a full year’s subscription rather than make higher per issue revenue on the news stand. After a few years, you can start counting on subscription fees renewing every month from different subscribers. You can predict how much money you will have every month. And that allows you to plan.

Also, cashflow is about peace of mind. The reason you want regularity and predictability is because when your near-term pipeline is less than full, you can sleep well at night knowing that you are not going to run out of money to operate your business. If your cashflow is irregular, unpredictable, and causes you to lose sleep at night, here are a few ways to improve it:

Offer More Payment Options

Not everyone has perfect credit. From divorce to medical bills, there are any number of reasons why good people end up with bad credit scores. When a credit check is the only way you vet potential customers, you will be missing out on a lot of revenue. As a small retailer, the issue for you is how to manage the risk.

Furniture Today talks about Crest Financial, a company that offers financing with no credit score needed. It is available to small retailers. Crest is one of many services from which to choose. Do your research before partnering with any finance company. The best ones will be rated highly. This type of program helps small retailers say “yes” to more customers, thus dramatically increasing cashflow.


Factoring is an important financing tool for companies that are in the type of business where it takes a long time for accounts receivable to pay off. A factor purchases your slow-paying receivables for a price, minus a discount for commissions and fees. Investopedia explains the benefits in the following manner:

Although factoring is a relatively expensive form of financing, factors provide a valuable service to (a) companies that operate in industries where it takes a long time to convert receivables to cash, and (b) companies that are growing rapidly and need cash to take advantage of new business opportunities.

You will never be able to take advantage of the next opportunity if you are constantly waiting for the previous opportunity to pay off. Take advantage as there are several companies that specialize in factoring for SMBs.

Give Customers More Opportunities to Spend Money

One of the best ways to increase your cash flow is to give the customers you already have a reason and opportunity to spend more money at your place of business. They’re in your store. They’re making a purchase. They’re already in the mood to spend money.

Some restaurants are discovering creative ways to get customers to happily spend more. And while you think about it, that’s a pretty neat trick when they have just spent a lot of money on a meal and are quite full and satisfied. One restaurant called Jim & Nick’s serves delicious miniature cheese muffins as appetizers. Their customers love them. To capitalize on that, the restaurant sells bags of the mix for people to take home. They are making a killing on satisfied, full to the gills customers by giving them something else to purchase.

A hardware store can sell training on how to do small tasks around the house. A clothing store might add dry cleaning services, even if they are not the ones that do the dry cleaning. You get the idea. Don’t just stop at the first sell. Think about what the customer might need after making the primary purchase and shell that as well.

Think about how much money McDonalds has made by simply asking customers if they would like fries with that. Offer the equivalent of fries with your product, and you will double your cashflow. Don’t forget to look into factoring, and more credit offerings.

About Shawn Hartley

Creative technologist by day. VP at Corporate 3 Design in Omaha. Proud father and husband.