Which of the following is a method to improve cash flow for a small business?

Managing inventory efficiently and controlling expenses is indeed an effective method to improve cash flow for a small business. Efficient inventory management ensures that a business does not tie up too much capital in stock, which means that funds can be released for other critical operations. By holding the right amount of inventory—neither too much nor too little—a business can maintain the ability to meet customer demand while minimizing excess that may become obsolete or incur additional holding costs.

Controlling expenses is equally essential; it allows a business to reduce unnecessary costs and increase net income, contributing positively to cash flow. Regular monitoring of expenses helps identify areas where savings can be made without sacrificing quality or service, enhancing overall financial flexibility.

In contrast, increasing fixed costs would typically strain cash flow as it raises the overhead that the business must cover each month, leaving less available cash for other needs. Delaying receivables would also negatively impact cash flow since it means the business would wait longer to collect payment from its customers, potentially leading to cash shortages. Reducing sales prices could lead to higher sales volume, but it may also result in decreased revenue overall, thereby harming the bottom line and cash flow in the long run. Hence, managing inventory and controlling expenses directly contribute to a healthier cash flow environment for