9 Cash Flow Management Tips
Your business’s cash flow is the blood that flows around the business and makes operations, growth and development possible. In recent years, recessions have made time tough for all small business, leaving some in need of a boost in this area. If your business has been stressed and strapped for cash, take a look at these 9 tips:
Leasing your equipment and premises rather than buying is a huge positive financial move that can benefit any company. While this is an ongoing cost, it’s extended over a long period of time in most cases, which allows you to have more money on a monthly basis. Furthermore, when it comes time to upgrade, you won’t have obsolete equipment on your hands – just upgrade and exchange.
No one likes paying bills, even your customers. Therefore, if you’ve given a loan or are otherwise expecting payments, offer incentives for customers to get their cash in early. This gets you the money you need more quickly in most cases, improving your cash flow.
Use Credit Checks
Be selective about who you lend or sell to. Use credit checks to discover which customers are worthy of your trust and stop leaving important financial arrangements to chance. This is a huge step towards stopping a loss of funds due to unreliable payments.
If you know other companies that are like-minded and in the same boat as you, form a buying cooperative. This is when owners pool their money in order to get better bulk deals from suppliers used to keep business moving.
Evaluate your inventory and decide what products are moving and which aren’t. Get rid of those that aren’t popular at a discount if necessary, and make more room for additional popular products and services. This can lose you money at first, but increases cash flow in the long run.
Don’t Dally on Invoices
Send out your invoices immediately. This promotes quicker repayment on the part of the customers.
Electronic payments involve initial investment, but cut back on the long-term expenses of paper investments and other unnecessary expenditures. You can also wait until the morning a bill is due to make a payment, giving you a little more wiggle room.
This isn’t always a practical method, but will certainly increase the amount of cash you’ll have coming in. Evaluate your products and increase the pricing of those that are more popular when reasonable.
The Right Savings Account
Invest in a high-interest savings account. This is a way to increase your cash supply over time, depending on how much you invest in the account in question.
These are 9 things every business owner should be aware of when attempting to increase their business’s cash flow.