If you are running a business, you probably already know how vital cash flow management is to your business’s success and growth. After all, knowing what money is coming in and going out can help you plan for the future. With a negative cash flow you are running the risk of bankruptcy, even if your business is making profits.
By maximizing your business’ cash flow, you can enhance its profitability, achieve targets in a shorter time, and lower your operating costs. If you have been wondering how to improve business cash flow, here are a few practical tips that will help you do just that.
Send Out Invoices Right Away
The quicker you send out your invoices, the faster you will have cash coming in. Ensure that your invoice contains the due date stated a few times throughout and that the terms and conditions are clearly mentioned. Moreover, include all the instructions about the payment method in your invoice.
Get Customers to Pay Invoices Early
Another way to increase your cash flow is to get your customers to pay the invoices on time. Here are some strategies you can use to do so:
- Give discounts to customers who pay invoices early or on time
Have a specific due date mentioned for the payment, after which you can start charging a late fee or penalty.
If neither of the above-mentioned strategies works, you can then consider invoice factoring. This allows you to sell your unpaid invoices to a company to receive immediate cash
- Ask For Payments Via Direct Debit or Credit Card
Ask your client’s to pay using direct debit credit or debit cards. Most direct debit facilities are arranged by your bank while Paypal and Stripe are low-cost platforms for facilitating credit card payments. Having a direct debit or credit card arrangement puts you in more control of when clients pay their account.
If your cash flow is poor, it may be time for you to start considering increasing the prices of your products and services. This will help you improve your financials and bring in more cash. See what your competitor is offering and how you can charge the same amount. Having lower prices means that you might be selling yourself short. However, this doesn’t mean you overcharge.
Pay Suppliers Less
Paying suppliers less will help you stay well under your business budget and improve your cash flow. You can offer them early payments in exchange for a discount. Moreover, some suppliers offer discounts if you buy in bulk. This is also one thing you can do to improve your business cash flow.
Improve Your Inventory
Consider liquidating the items that are not being sold. Start selling or giving goods away that have been in your inventory for a while, even if it means selling them at a discount. These goods can tie up your cash.
When it comes to improving business cash flow, these tips will help you immensely. If you need help with your cash flow management or bookkeeping, consider contacting Accurate Accounts. We provide the best cash flow management and bookkeeping services in Perth and can help you grow your business with our financial experts. Book your no-obligation consultation with us now!