Having a drop in cash flow can send any business owner into a panic. Here’s are 10 practices to ensure your business maintains a positive cash flow.
1. Send Invoices Immediately. The faster you send the invoice, the faster customers pay. There are several software applications available to help you stay on top of invoicing, FreshBooks, Sage, Quickbooks Online, Xero, and Zoho Books are a few.
2. Incentivize Timely Payments. Choose a consistent time when payments are due and implement a late payment fee. Have the penalty cited within the Terms and Conditions and on the invoice. Reminders and incentives (i.e. discounts for paying early) are also good ideas.
3. Increase Prices. Assess your products and services and compare them to the market. Is there a way for you to increase your value and/or your prices? Do both.
4. Expand Your Sales Market. Create new services/products or develop a new market strategy to reach a new target audience. You can also encourage higher sales per transaction by over bundles or advertising related products.
5. Re-evaluate Operating Expenses. Would ordering in bulk, leasing out your equipment, buying more efficient equipment help you save money?
6. Liquidate Old Inventory. Anything that you don’t need (i.e. equipment), sell. Discounting old merchandise can also increase cash flow.
7. Strategically Pay Vendors. If there isn’t an incentive to pay early, pay your invoice when it’s favorable for you and your business.
8. Business Savings Account. These accounts often yield interest on the balance.
9. Cash-Back Business Credit Card. These accounts give you money back for spending money (that you would normally spend anyways) on your business.
10. Small Business Loan—Line of Credit. Lines of Credit allow you to have access to a set amount of money but only borrow (and pay interest on) what you actually need/use and as you pay, the balance replenishes itself.
It’s not always about having a lot of money coming in, cash flow is greatly increased by limited how much money goes out and having a system and strategy to manage it is priceless.