The long-term success of a business is only possible with effective cash flow management. Being able to smoothly run your business without needing to constantly borrow money that you can’t pay off is the only way that your business can survive, especially during the early stages of growth.
Managing cash flow is easier said than done. But if you don’t have any control over what’s coming in and out, you will probably hit all number of issues, from being unable to pay your staff on time, to running out of cash to keep your business afloat entirely.
If you know it’s about time you learned to manage your cash flow better, here are 5 tips to set you off in the right direction:
Chasing up invoices can be something of a nightmare, especially if you’re dealing with frequent late payers. If you’re invoicing off a specialist platform like PayPal, or even if you’re keeping it simple and using a Word template, you can adjust your invoice terms to request that the invoice is paid off within a certain time period. If it’s not, some platforms will automatically remind the client of the payment.
Everybody loves a discount, and even more so in business. Try offering a paid in full upfront discount to encourage your clients to make faster lump-sum payments and save you the frustration of waiting around for your money. While it’ll mean receiving a little less money in total, the benefits of receiving instant payments are usually enough to make up for that.
If you’ve got a lot of credit cards and loan payments on the go, it might make more sense to roll all of those into one lower-interest payment, known as debt consolidation. That way, you’ll be able to more easily pay off your debts, not only because they’ll be more organized, but because the lower interest will mean there’s less to pay.
There’s no problem with using a credit card to purchase your goods if you’re experiencing a period of lower financial income. In fact, it’s the easiest way to keep your business running as it should do without having to compromise on the quality of your product or service. Just make sure you pay off your credit cards monthly as the bill can quickly rack up to something less manageable.
Just as you can offer paid in full discounts to your clients, it’s a good idea to ask your vendors for paid in full discounts for your own purchases. For example if you are looking to purchase insurance for your staff, then you want to find out how much insurance would cost and then ask for a build discount. Even if they don’t generally offer such discounts a vendor might be happy to offer one to you if it means that you’ll be more prompt with payment, which creates a win-win situation for the both of you.
That's a wrap on 5 ways business can manage cash flow better. What do you need to implement to improve your business?