Secret to swift cash flow manufacturers can't ignore

Strategies for Improving Cash Flow

One of the most effective ways to improve cash flow is by optimizing your inventory management. Excess inventory ties up capital that could be used elsewhere, while insufficient inventory can lead to missed sales opportunities. Implementing a just-in-time (JIT) inventory system can significantly reduce holding costs and improve cash flow. According to a study by the Institute of Supply Management, companies using JIT systems have seen inventory cost reductions by up to 30%¹.

Another strategy is to renegotiate payment terms with suppliers and customers. Extending payment terms with suppliers while reducing the time customers have to pay can improve cash flow. For instance, if you can delay payments to suppliers by 15 days while reducing customer payment terms by the same period, you effectively gain an additional 30 days of cash flow.