Maximizing Cash Flow: A Smart Strategy for Small Businesses

As a small business owner, you know how important your cash flow is. Efficient money management isn’t just about making sales and paying bills; it’s about strategically optimizing your cash flow so your business can grow, thrive, and stay prepared for unexpected challenges.

Let’s dive into how to improve the cash flow for your small business and how you can put these strategies to work today.

Navigate to Where You Want to Go:

1. Automate Your Payables
2. Use a Lockbox Service
3. Accept Digital Payments with Merchant Services
4. Centralize Your Accounts
5. Protect Your Business from Fraud
6. Start Optimizing Your Cash Flow

How to Improve Cash Flow for Your Business

1. Automate Your Payables

Manual payments take time, and missing deadlines can lead to late fees or damaged vendor relationships. In fact, “one of the most common cash flow challenges we see small businesses face today is waiting on customer payments,” says Lauren Kvamme, Vice President, Treasury Management Office at MidWestOne Bank. Using payment solutions that automate your processes helps you save time and money by:

• Paying vendors and suppliers automatically on a set schedule
• Reducing the risk of fraud with secure electronic payments
• Avoiding late fees by ensuring bills are paid on time

TM solutions like ACH Services and Wire Transfers help automate your processes and reduce your risk of fraudulent activity.

Other electronic payment options like ACH are also a great option for businesses  to schedule payments ahead of time, so they don’t forget or have to rush to cover a bill. This helps avoid last-minute stress and missed due dates.” – Lauren Kvamme, Vice President, Treasury Management Office at MidWestOne Bank

Pro Tip: Set up recurring ACH payments for fixed expenses (like rent, utilities, and supplier invoices) so you never miss a due date.

2. Use a Lockbox Service

Waiting for customer payments to clear can slow down your cash flow. With lockbox services, customer payments are sent directly to a dedicated P.O. box managed by your bank, where they are quickly processed and deposited into your account. A lockbox service can:

• Reduce mail delays by streamlining payment processing
• Speed up deposits, improving cash availability
• Automate check handling, reducing manual labor

“The biggest advantage of this service for your business is that the bank handles the check deposits for you, so you get your money faster without leaving your office,” Lauren explains.

Real-World Scenario: If you run a medical office or property management business that receives a lot of checks, a lockbox service can cut your processing time in half and free up your team for other tasks.

3. Use Merchant Services for Payment Processing

If you’re not accepting digital payments, you’re leaving money on the table. Utilizing tools like credit card processing, mobile payments, and e-commerce solutions to help you get paid faster and reduce friction for your customers.

• Accept credit/debit cards, online payments, and mobile transactions
• Speed up cash flow with faster deposits into your business account
• Improve customer experience by offering multiple payment options

Merchant Services offer an all-in-one point-of-sale tool that can help transform your business with payment processing and business management solutions.

Lauren recommends looking for a provider with low fees, strong customer support, and easy setup so you can get started quickly.

Pro Tip: Look for merchant services that offer same-day or next-day funding to improve cash flow even more.

4. Centralize Your Accounts

If you have multiple business accounts or locations, cash concentration services help sweep funds into a central account, giving you better visibility and control over your money.

• Maximizes liquidity by consolidating funds in one place
• Reduces idle cash, ensuring money is used efficiently
• Improves forecasting, making budgeting easier

“Sweep accounts automatically move extra cash into savings so it’s earning interest instead of sitting unused, and you always know exactly how much cash you have,” Lauren advises.

Who This Helps: If you run multiple business locations, keeping cash spread across several accounts can make it hard to manage. A Sweep Account helps centralize funds, so you always know where your money is.

5. Protect Your Business from Fraud

Fraud is a growing concern for small businesses, and one scam can drain your accounts before you even realize what happened. Help protect your business from risk with tools that monitor your payables for you and give you instant access to your accounts. Small Businesses can benefit from:

• Positive Pay – Matches check details against your list of issued checks to prevent fraud
• ACH Fraud Filters – Let you control which businesses can debit your account
• Multi-Factor Authentication – Adds an extra layer of security to online banking transactions

According to Lauren, a big mistake many small businesses make is “not checking their bank account often enough.”

She adds, “Fraud can happen in small amounts over time, and many businesses don’t notice until it’s too late.”

She also recommends dual control:

“Always have two people approve payments. It’s one of the best ways to prevent fraud, whether it’s from a scam or an internal mistake.”

Real-World Solutions: MidWestOne is empowering small business owners like you to take control of their finances with our Small Business Bundle – designed to protect your business from risk.

Start Optimizing Your Cash Flow Today

A strong cash flow strategy isn’t just about making money — it’s about managing it wisely. By incorporating Treasury Management products to assist with cashflow management, you can get paid faster, reduce risk, and ensure your business stays financially strong.

“Always know how much cash you have today and what’s coming in next week,” Lauren advises.

“Cash flow problems start when businesses assume money will arrive on time.”

Want to learn more about how TM solutions can work for your small business? Connect with the MidWestOne Treasury Management team today.