10 Tips to Improve Cash Flow for Industrial Businesses

Your cash flow is the money moving in and out of your business. Positive cash flow means you have more coming in than going out, which is the sweet spot we all want to hit. However, in industries like oil and gas, cash flow problems hit harder. Why?

Long payment cycles: Big industrial projects often involve months or even years of work before getting paid in full.
High upfront costs: Equipment, materials, and labor require hefty initial investments.
Market fluctuations: Commodity prices can swing wildly, impacting revenue.

A U.S. Bank study found that 82% of business failures are directly related to cash flow problems. Don’t worry if you’re feeling the crunch. You’re not alone. Just remember, there’s a path forward.

1. Speed Up Getting Paid

One of the easiest ways to increase your business’s cash flow is to get paid faster. Simple. However, implementing the right systems can make a huge difference.

Ask for deposits or milestone payments. Instead of waiting until the end of a project to get paid, break it into phases and request payments after completing each milestone to keep cash flowing throughout the project.
Send invoices immediately. The sooner you bill clients, the sooner you get paid. If you’re still using manual invoicing, switch to automated tools like QuickBooks or FreshBooks. They send invoices quickly, track payments, and even send reminders.
Expand payment options. Make it easy for clients to pay. Accept credit cards, ACH transfers, or even digital wallets like PayPal. The more options you provide, the faster they’ll pay.
Use accounts receivable financing. Do you have unpaid invoices piling up? Consider selling them to a business funding company. You will immediately access the funds you need to keep things moving while you wait for client payments.

2. Work Out Better Deals with Vendors

Vendors and suppliers are key players in your business. Building strong relationships with them can help you negotiate better terms, easing your cash flow issues.

Extend payment terms. Ask for 45- or 60-day payment terms instead of the standard 30 to give you more time.
Take advantage of discounts. If you can manage it, check with your vendors to see if they offer discounts for early payment. Even small savings can add up over time.
Build relationships. If you are loyal to vendors, they are often more flexible. Open communication and a good track record go a long way when you need some wiggle room.

3. Get Smarter About Inventory

Inventory can take up a lot of cash, especially in industries where materials and equipment cost a fortune. The goal is finding the right balance: not too much, not too little.

Go lean with inventory. Implement systems like Just-In-Time (JIT) inventory management. This approach minimizes excess stock and only keeps on-hand what you need to meet demand.
Sell unused inventory. Do you have materials or equipment gathering dust? Sell them off. Even if you have to discount them, it’s better than locking up cash in unused assets.
Use inventory management tools. Management software can help you track inventory in real-time, so you’re never caught off guard by overstock or shortages.

4. Cut Costs Without Cutting Corners

Many businesses take the easy road and slash services. Cutting corners and lowering the quality of your work will not help your business succeed. Review your expenses regularly to uncover hidden savings opportunities without impacting your operations. Here’s how to save smartly:

Reduce your energy costs. There are many strategies your business can use to reduce your business’s energy costs, like upgrading to energy-efficient machinery or switching to renewable energy sources.
Reevaluate office space. Do all your employees need to be on-site? Consider letting administrative staff work remotely to save on office costs.
Automate where you can. Automating your systems can save time and money while improving accuracy in everything from payroll to supply chain management.

5. Manage Debt Wisely

Debt can be a heavy burden or a helpful tool. The trick is knowing how to manage it effectively.

Refinance high-interest loans. Debt restructuring, which can include refinancing and consolidation, works to reduce your monthly payments and increase cash flow.
Prioritize high-interest debt. First, pay off the most expensive loans to minimize long-term costs.
Explore asset-based loans. These loans let you borrow against assets like equipment or property, offering a quick cash boost with manageable repayment terms.

6. Leverage Your Assets

Does your business own valuable assets like heavy equipment? You can use them to improve cash flow.

Sell and lease back equipment. If you own fully paid-off machinery or vehicles you don’t use on every project, consider selling them to a leasing company and leasing them back to free up cash without disrupting your operations.
Use collateral-based loans. Borrow against the value of your assets, such as equipment or real estate, to get the funds you need without taking on traditional debt.

7. Revisit Your Pricing

How often do you review your pricing strategy? If it’s been a while, now’s the time to look closer.

Account for rising costs. Are your prices keeping up with increases in materials, labor, or other expenses? If not, don’t hesitate to adjust to protect your margins.
Offer discounts for larger orders. To encourage clients to spend more, offer bulk discounts or incentives for upfront payments.
Review pricing regularly. Market conditions change quickly, so make it a habit to reassess your pricing structure to stay competitive and profitable.

8. Use Cash Flow Forecasting to Plan Ahead

Cash flow forecasting isn’t just for big corporations. It’s a tool every business should use.

Create multiple scenarios. Prepare for the best-case, worst-case, and most likely scenarios so you’re never caught off guard.
Use software to simplify. Tools like QuickBooks make forecasting easier by automating data collection and analysis.
Update your forecast regularly. Continually analyze your cash flow forecast to account for business or market changes.

9. Tap Into Government Programs

There’s a good chance you’re leaving money on the table by not taking advantage of government incentives.

Clean energy credits. If you work in renewable energy, consider programs like the Inflation Reduction Act for tax credits and grants.
R&D Tax Credits. If you’re investing in new technology or innovation, you might qualify for tax rebates.
Local Grants. Many states offer grants or low-interest loans for industrial businesses. A little research can uncover valuable opportunities.

Consult a tax expert to help determine which credits and deductions apply to your business.

10. Build an Emergency Fund

Creating an emergency fund might seem like a luxury if you’re struggling, but even small contributions will add up over time.

Set aside a percentage of your profits. Commit to saving 5–10% of your profits in a dedicated account.
Automate savings. Schedule automatic transfers to ensure consistency.
Use unexpected income wisely. If you land a big project or see a temporary revenue spike, put some of that money into your reserve fund.

Don’t Go It Alone

Sometimes, solving cash flow issues means getting outside help. Cash flow challenges can feel overwhelming, but they’re not insurmountable. You can get your business back on track by taking proactive steps.

You don’t have to make huge changes. Start small and focus on maintaining your dedication to achieving your business goals. Implement one or two changes today and build from there. Over time, these strategies will create a stronger, more resilient financial foundation for your business.

Equify Financial knows your industry and has the financial tools to get you the cash you need to grow your business. Let’s talk about your cash flow and business goals.