As a business owner, it's important to always be aware of your company's cash flow - after all, cash is the lifeblood of any business. Whether you’re a café owner, law firm director or you supply office water bottles in Sydney, here are 10 ways you can keep cash flowing into your business at all times:
- Make sure you have sufficient working capital
Working capital is the money that you have available to use for day-to-day expenses and unexpected costs. You can increase your working capital by taking out a line of credit or getting a business loan.
- Keep track of your accounts receivable
Your accounts receivable are the payments that you are owed by your customers. One way to stay on top of your receivables is to send out invoices as soon as the product or service is delivered.
- Offer discounts for early payment
Giving your customers a discount for paying their invoices early is a great way to encourage them to do so. It's also a good way to get some much-needed cash into your business quickly.
- Have a solid collections process in place
If you don't have a system for collections, chances are good that your customers will take their time paying you. Put together a system for following up on past-due invoices and stick to it religiously.
- Stay on top of your inventory levels
Doing regular inventory audits will help you avoid having too much or too little inventory on hand. Having too much inventory can tie up valuable cash that could be used elsewhere in your business. On the other hand, running out of inventory can lead to lost sales and unhappy customers, so it’s important to find the right balance.
- Manage your expenses carefully
Take some time every month to review your business expenses and see where you can cut back or eliminate certain things altogether. There's no need to waste money on unnecessary items when you could be using that money to grow your business in other ways.
- Review your pricing regularly
Reviewing your prices regularly and making adjustments as needed will help ensure that you're charging enough to cover your costs and make a profit. If you find that you're regularly discounting items just to make sales, it may be time to raise your prices.
- Offer financing options
Giving customers financing options can help increase sales and improve cash flow. You can offer financing through third-party providers or set up in-house financing with lines of credit or loans.
- Use technology to your advantage
There are many great software programs available that can help streamline financial processes and improve cash flow. Utilising these tools can automate many tasks related to accounting, invoicing, and collections - freeing up time for you and your staff.
- Seek help from professionals
If managing cash flow is proving too difficult for you or if you simply don't have the time or resources to do, consider hiring a professional bookkeeper or accountant. They can help manage day-to-day financial tasks and give you peace of mind knowing that someone else is keeping an eye on things.
Cash flow is essential for any business, big or small
By following these tips, you can help ensure that there's always money coming into your business so that you can keep things running smoothly. Don't let cash flow issues take down your company - be proactive and take steps now to prevent problems later down the road.