In business, cash is king. If you don’t have enough cash on hand, it can be difficult to meet your obligations and keep your business running smoothly. That’s why it’s important to take steps to increase your business’s cashflow. Here are ten tips to do just that.
- Increase your prices
Increasing your prices for your products and services means that for each item you sell, you gain more money for your business. Care needs to be taken when you do this, as you may create a barrier to entry for prospecting customers if you become uncompetitively priced.
- Improve your invoicing process
One of the easiest ways to improve your business’s cashflow is by making sure that your invoices are paid on time. To do this, be sure to include clear payment terms on each invoice and follow up with customers who are late in paying. You can also use invoicing software to automate the process and keep track of payments.
- Offer discounts for early payment
Another way to encourage prompt payment is by offering a discount for early payment. This can be a percentage off the total amount due or a flat fee reduction. Either way, offering a discount will likely motivate customers to pay their invoices more quickly.
- Review your credit terms
If you’re extending credit to customers, be sure to review your credit terms periodically. You may need to adjust your terms based on changes in your industry or the current economic climate. For example, you may need to shorten your payment terms from 30 days to 14 days in order to improve your cashflow.
- Get paid upfront for services
If possible, try to get paid upfront for services rendered. This will ensure that you always have cash on hand when you need it. Of course, not all businesses are able to operate this way, but if it’s possible for yours, it’s definitely worth considering.
- Slowing down paying your suppliers
Maintaining a good relationship with your suppliers is key to your business, however for the purpose of this blog we are discussing cashflow and keeping more of it within your business. Adjusting / delaying paying your suppliers may help to keep the cash flowing within your business, rather than funding your customers work – for example, a builder may wish to pay for the materials for the current job on a credit account, settling up once the job has been complete and has been paid by the customer, rather than funding the materials out of their own money before being reimbursed.
- Maintain a healthy inventory level
It’s important to strike a balance between having too much and too little inventory on hand. If you have too much inventory, you’ll tie up valuable resources that could be used elsewhere in your business. On the other hand, if you don’t have enough inventory, you may miss out on sales opportunities. Maintaining a healthy inventory level will help ensure that you have the resources you need when you need them and free up cash that would otherwise be tied up in inventory storage costs.
- Review and reduce expenses
Whenever possible, look for ways to reduce expenses in your business.” This may involve renegotiating contracts with vendors or suppliers or cutting back on non-essential purchases.” Reducing expenses will free up cash that can be used elsewhere in your business and help improve your bottom line.”
- Use accounting software
If keeping track of receivables and payables feels like a full-time job, it’s probably because it is—at least if you’re doing it manually. One way to free up some time (and improve your financial accuracy) is by using accounting software like Xero. Software makes it easy to manage invoicing, payments, and other financial tasks all in one place—leaving you more time to focus on running your business .
- Hire a bookkeeper
If managing finances isn’t something you enjoy or if it’s preventing you from working ON your business instead of IN it, then it might be time to outsource this task by hiring a bookkeeper . A bookkeeper can handle all of the day-to-day financial tasks for your business so that you can focus on more important things—like growing your company . Hiring a bookkeeper is an investment , but it’s one that can quickly pay off by freeing up your time and giving you peace of mind knowing that your finances are in good hands .
Improving your business’s cashflow is critical if you want to keep your business running smoothly. By following these ten tips, you can make sure that there is always enough cash on hand to meet your obligations and take advantage of opportunities as they arise.
As always, please get in touch if you require any help with managing your business’s cashflow.
