Tips for Improving Cash Flow
Businesses rely on cash flow for covering operating expenses as well as building savings for emergencies and growth. To improve your flow, you need to look at the whole equation to reduce costs while increasing sales. This is usually easier said than done, so some quick tips can help you get started.
Send Invoices Quickly and Get Customers To Pay on Time
Getting invoices quickly to customers increases your chances of getting quickly paid. If building your invoices is a tedious process, you can find software compatible with your systems to automatically update them and send out invoices. To get your customers more incentivized to pay on time or early, you can offer discounts, consider charging late fees and make timely reminder calls.
Increase Prices and Sales Market
A struggle with cash flow can sometimes be attributed to charging too little. You need to be able to balance competitive prices with covering expenses such as a fair wage for yourself and your employees. Often, if you research the market, you will find that you are undercharging for some of your products or services. This research can also show you how to expand your marketing, include a broader audience and reward your existing one. This can increase sales and further improve money flow.
Reevaluate Operating Expenses and Inventory
One key to reevaluating operating expenses and reduce costs is to consistently pay vendors on time. This reduces your late fees and can establish a history of trust. You should also determine which expenses are unnecessary and which have cheaper options. For example, if you pay for accounting, point-of-sale, and inventory software individually, and update them independently, then switching to an integrated and automated system can save you time and money.
You can also cut expenses by reevaluating inventory, especially if you are paying for products which do not sell. Liquidating old inventory, cutting underperforming product lines and streamlining manufacturing processes can give you more wiggle room.
Consider Banking and Financing Options
Having a business savings account can earn you more in interest than most checking accounts as well as give you a way to track savings goals. You can also work with your bank for a credit line or business loan to ease flow while you work on cutting expenses and increasing profits.
Cash flow is a complex system of money coming into your business and going out of it. By working on both sides of the equation, you can ease your funding and better save for emergencies and future growth goals. You can reduce your inventory of unsold products, streamline office functions and even take out loans to help ease the flow and keep your company running efficiently.