Best Ways to Boost Your Company’s Cash flowJuly 08 2016, 0 Comments
Keeping a healthy cash flow is arguably the most important thing when you’re running a small business. You need to keep your company afloat, whilst doing your best to make profit in order to grow in the short and long term. So to get you on the right track we’ve listed the best ways to boost your cash flow.
Know Your Business Inside & Out
If you start up a company, it is integral that you know every part of your business. You should be constantly assessing your income and outgoings, stock, credit and other relevant financial costs to ensure that you are on top of what’s going on and you’re not occurring any unneeded expenditures. When you understand your business fully and you have that in depth insight into what’s happening, that’s when you can begin to make improvements.
Keep On Top of Those Invoices
Simply put, the more organised you are with invoices, the quicker you will get your money. With so much going on running your everyday tasks, invoicing can often be overlooked but it is vital that you integrate it into your weekly schedule. It is an essential part of making your business a success.
Makes Payments Easy
When it comes to paying, you need to make the process as simple as possible for your customers. Bank transfers are often the most preferred method of payment but don’t forget about accepting cash, cheque or online software such as PayPal. Always make sure it is straight forward and clear so they know when the invoice is due and how they can pay.
Monitor Those Payments
In a perfect world is everyone pays on time (or even early) but realistically this doesn’t happen. There will be times when you need to chase up clients, so you need to be wary of outstanding payments and what has been paid so that your cash flow is constantly balanced or in profit. Take time to monitor when they pay so you can begin to see their patterns, which will help you predict when they will need a nudge before they pay late again.
In addition, you will need to monitor your own situation. The money that you owe and who you owe that money to. This needs to be accurately logged so that you are organised with your outgoings. This enables you to pay customers on time without denting your own cash flow. A good system will go a long way to maintaining a healthy cash flow.
Reassess & Renegotiate Terms
Once you've built up a relationship with your clients and suppliers, you could possibly be able to negotiate more beneficial payments terms to improve your financial standpoint. This could be done by spreading payments or increasing the invoicing pay off periods. It is not always possible but if you’re in the position where it is, it can prove very fruitful for you if you’re in a tight situation one month.
Revamp Your Stock Management
This is mainly aimed at businesses that sell goods. By analysing the stock you have you can gain an insight into what is selling and what isn’t. You may have dead stock, that won’t sell, which ultimately means a loss of money so you need to identify your overall levels and ensure it reflects the sales you’re seeing. Those items that produce more profit should be favoured and you should also be making sure there is adequate stock in at all times.