As a business owner, you know cashflow is essential for your company.
According to a recent study, a whopping 82% of businesses failed due to cashflow problems. This is concerning for any business owner who wants to grow their business into a thriving company. One or two missteps with the cash that comes in and out of your business can create a snowball of financial problems that ends in business failure.
Fortunately, avoiding cashflow problems can be as simple as following a few tips. By using a few best practices you can boost your cashflow and protect your business from stagnancy. If you are a small business owner who needs to get your finances in order, here are a few tips to get you started.
1. Understand the Big Picture
The first step in solving cashflow problems is to understand the big picture. Take a look at your cashflow statements and forecast to get a complete picture of your business finances. Use a cash flow calculator to set realistic goals for improving your business financials.
2. Always Have a Financial Cushion
One of the best tips for operating cashflow is to always have a financial cushion. Think of this like emergency savings for your business. If your business is out of funds, you can learn more about applying for extra funding.
3. Connect With the Accounts Payable Staff
A great cashflow tactic is to connect with your client’s accounts payable staff. By putting a friendly face to the invoices they receive, you have a better chance of getting paid faster and in full. While this tactic may seem simplistic, building relationships is the foundation of good business.
4. Stay on Top of Invoicing
If you are concerned about your business cashflow, consider closely monitoring your invoicing. Your invoices should be sent immediately and followed up on as soon as they are late.
Make sure you provide your clients with several ways to pay and an easy process overall. This is a great way to ensure money is constantly flowing into your business.
5. Cut Costs
Cashflow is not just about the money you receive, but also the money that you spend. For this reason, one of the best ways to improve your cashflow is to cut your overhead costs. The money you save can be funneled into other parts of your business or placed in your cushion account.
Use These Tips to Manage Cashflow and Grow Your Business
By using these tips, you can avoid cashflow problems in your business.
Start by looking at the big picture and understanding your business finances. You should also connect with your client’s accounts payable staff, stay on top of invoicing, and provide several payment methods for your clients. Make sure always have a financial cushion and cuts costs where you can.
By following these tips, you can ensure consistent cashflow for your business.
Don’t forget to browse our site for more tips on running a profitable business. After visiting our Startups and Finances sections of the Bootstrap Business Blog, we'll help you keep the cash flowing in!
