Business, no matter big or small, requires your sweat and blood to keep growing and flourishing. In this competitive world, it is essential that business owners keep hunting for ideas to bring balanced cash flow into practices. For a healthy business cycle, the cash flow you inject severely impacts your future business decision. We have come up with 10 points that can actually help you with your cash flows.
1. Plan In Advance
Just like when you bake a cake you gather the ingredients and plan in advance. Just like that in a business, you need to plan in advance to improve the quality of your cash flow. Create a strong one-year cash flow projection for your business that forecasts all cash activities to your optimum capacity. With this plan, you can then effectively see that as the orders/demand increases you can see where the cash increments are expected in terms of both expenses and payments. This way you can clearly track all cash inflows and how to effectively boost them with time. This further helps in unexpected cash receipts and other activities that might also pop up apart from your projection.
2. Cut Costs
Managing cash flow is not primarily about increasing the cash input that your business receives. It is also very important for you to run a successful business, to cut your costs where you can. To be prosperous you also need to reduce the amount of cash that is going out of the business as well. Try to analyze all unnecessary expenses that are currently induced. Attempt to see if they really are obligatory or if you might be able to manage without them. If you are, then you absolutely need to work on cutting those costs down. This is the only way that is going to make your business more profitable in the long run.
3. Better Payment Terms
One of the major issues that businesses have today is the payment. The key reason that many of them actually do not survive and sink to the bottom is because of this particular issue. Without receiving payments on time, there is no way that your business can further process with everyday functions. For your business to succeed, it is essential that you set up better terms of payments and keep following up with invoice reminders. Implement active strategies that take into account a functional payment cycle that happens in proper rotation. You can even introduce sorts of discounts to your customers who eventually clear their invoices before a certain period of time. On the contrary, you can also charge some sort of penalty or interest to the customers who actually do not pay their invoices within a certain time of period.
4. Create A Pricing Strategy
Analyze what you are offering your customers. See that the products or services that you are offering your customers carry a competitive advantage. It is essential for you to set up a pricing strategy that takes into account the many fluctuations of several factors that lead to price increments also. As the increases in the minimum wage were implemented from 1st July 2014, there can be certain possible increases in supplier prices also. Keeping all these factors into mind, then set up a pricing strategy that also gives you enough room to increase slowly. Any expected increase in operating costs needs to be included fully while drafting the complete pricing strategy for your business. Explore the dynamics and see where the costs can be executed without outing a huge strain on sales.
5. Improve Marketing Techniques
Your products or services might be of top-notch quality, but nobody can get a glimpe of these factors unless you show them. This is where marketing comes into play. Marketing is also the king of business as it can either make it or break it. To boost the cash flow, it is essential that you keep exploring and creating new marketing techniques to connect with customers. Explore and see if there are new ways in which you might be able to engage with groups of people and make them much more entranced towards your product or service. Bringing in more customers is one of the best ways to increase the cash flow in your business overall.
6. Introduce New Services or Products
Think out of the box! It is very important to keep your business up-to-date to be able to keep enticing new people. Try to add a new product or service that will garner the attention of a whole new client base. Find different things that match well with your business ideals and can eventually prove to be a great way to boost cash flow. Get creative and think of services to add to your existing products. Maybe you sell some electronics so think about adding serving facilities for your products. This way you get a whole new customer base that will stay loyal also. No matter what it is, do get imaginative, so your business can generate income that will increase cash flow.
7. Go For Accounts Receivable Financing
AR Financing is the complete way to turn unpaid invoices into immediate cash for your small business. By opting for this option, you are in safe hands as you do not have to fear any late payments in the long run. This is one of the best solutions to boost your cash flow. Many companies all around the globe use Accounts Receivable Financing and with this, you can encourage business growth like never before. Receivable financing companies, which provide excellent interest rates along with easy access, prevent businesses from coming under debt. AR Financing helps you in getting paid faster for the delivered work, which actually adds value to your business.
8. Lease Equipment
The best way to ensure steady cash flow is to stop it from blocking in one go. In business, it is very important to have access to equipment in every way. It is better to loan or lease equipment at a lesser price than to block buy it for the full price. With this, you can also gain lower monthly payments. This eventually can help you with keeping the cash flow in check and maintaining the flow effectively. This is the perfect way to evade from blocking money on assets that also might need to be upgraded each year.
9. Use a Business Credit Card
With a business credit card, you can also smoothen your cash flow. These cards also offer special features that are focused on helping in improving cash flow, especially with immediate payments. These cards can also give you as much as 60-90 days to pay thus letting you carry a balance from the previous month. The time of the month is also chosen by you, thereby giving you enough room to accommodate cash flow patterns in your own space.
10. Require Deposits on Large or Custom Orders
With services or products that are large in quality and are in bulk, it is crucial that you ask for deposits. These types of orders are high at risk and it is important that you have some sort of down-payment for them. This way if anything tends to go wrong, like an abrupt order cancellation, at least you will not have to bear the losses. This way your cash flow is safe and thus increases it in the future.