Cash flow is often a challenge for small businesses, but it is vital to maintain good cash flow if possible because it will give you more breathing space should things do wrong and you need more money than usual to get you through, say an increase in raw materials costs or s quiet spell in the summer months.
With that in mind, here are some simple steps you can take to improve cash flow in your company right now:
Shorten your payment windows
One of the best ways to improve company cash flow is to simply shorten the window of time that you give clients to pay. If you aren’t waiting months on end for invoices to be paid, you can better plan financially and ensure that you always have a float of money in the bank to see you through.
And give incentives
Of course, some companies will still have problems with late or non-payers, and if that is the case, often, you can encourage payments to be made early by offering a small discount of say 5-10 percent for early payers, or a small penalty of the same amount for anyone who pays late. Make paying as easy and attractive as you can and you should see an improvement in your cash flow as a result.
Consider a small business loan
Many business owners are hesitant to apply for small business loans when they are already having cash flow issues, but really that is exactly what they are there for, and companies like Fairway Finance Business Asset Solutions are very good at considering all circumstances. So, if you are really stuck, it is always worth seeing if you are likely to be eligible for a loan.
Audit your expenditure
Do you really still need to be paying hundreds of pounds for paper and ink when paperless solutions are so readily available? Do you absolutely need to have every light on at all times? Could you save money by paying one cleaner instead of two? Evaluate every single business expense you have and cut away anything that isn’t really necessary and your cash flow situation will automatically be improved.
Automating your customer service with artificial intelligence bots, your invoicing with cheap software packages, and anything else that it is possible to automate will free up money and boost your cash flow.
Sell your invoices
If you’re in a really tight spot and you have a lot of outstanding invoices, one thing you could consider doing is selling off your invoices to a third party who will chase the client for the outstanding sum of money. Often, they will buy for between 70 and 9- percent of the debt, so you will not get the full amount, but if it means you can keep the lights on and production going, it is often a pretty good deal to keep the cash flowing.
Keep the cash flowing, and your life as a small business owner will be so much simpler, not to mention successful, as a result.
Image Credits: Towfiqu Barbhuiya