Running a business has its own set of challenges. One prominent challenge entrepreneurs face is managing cash flow—the lifeblood of business. Still, business owners often disregard its importance, instead assuming that as long as they generate revenue, they will grow.
But with constant outgoings such as rents, utilities, stock, and wages to pay, your business can easily stagnate and fail without sufficient cash flow. Most companies can improve and achieve great success with improved cash flow.
Some reasonable solutions for companies include simplifying the payment process, using software for accounts receivable, and leveraging credit. Here are more approaches to consider to boost cash flow considerably.
Send Invoices Immediately
Any business relies entirely on sales and invoices. You cannot receive a payment if you do not send invoices. Stay on top of invoicing your clients and customers. The sooner you send your invoices, the quicker the cash will come in.
If you have a lengthy and tedious invoicing process, shift to cloud-based accounting services. Software for accounts receivable, such as Zoho Books and QuickBooks Online, offers incredible invoicing features that you can leverage to improve your cash flow.
Encourage Your Customers To Pay Early
If your customers take time to pay for your products or services, here are some ways you can encourage them to pay early.
Firstly, prepare invoices immediately and deliver products or services as soon as possible. If possible, give your customers incentives such as discounts for upfront payments. You can also request clients to pay a down payment for oversized or special offers. Lastly, you can establish processes that let you solve customers' disputes quickly.
Increase Your Inventory
It takes a lot of time to track inventory. If goods are not sold in a timely fashion can result in cash flow issues for your company.
Rather than buying more products that will not sell, why not make markdowns to your current inventory? It is challenging to reduce inventory options, but it will be good for your bottom line to dispose of any remaining inventory and focus on other stock options in the future.
Suppose you want to improve cash flow in your business. In that case, you must be objective about everything and not act with your emotions. Don't mix feeling and money.
Reduce The Number Of Cheques That You Accept
In the modern age, the use of cheques is becoming unpopular as more businesses and countries see it as an inefficient payment option in terms of speed and cost. For instance, the Singapore government is working to ensure the country is cheque-free by 2025.
Yet some businesses prefer cheques, perhaps because of a lack of awareness or habit. Incorporating bank transfers or card payments into your business will allow for fast payment, thus boosting your cash flow and modernizing your company's perception. You can also request your customers to change their modes of payment by giving them discounts.
For instance, "get a 5% discount on this invoice if you pay within three days."
Carry Out Customer Credit Checks
If some customers don't know how to pay with cash, then carry out a credit check before signing them up. If some clients have poor credit, they will not be able to pay you on time or at all. You can set it up with a high-interest rate as much as you want to make sales despite any doubtful credit.
Lease Instead Of Buying
You can avoid the expensive costs of new equipment and another cost by renting. It is cheap to rent equipment at a fixed monthly fee as this won't eat into your cash reserves.
Also, don't forget to consider the costs of maintenance and repair equipment you own when weighing up the benefits of buying and leasing. Most commercial lease contracts include servicing. Thus, leasing is the best option if you are coughing out a lot on technician fees.
Offer Multiple Payment Options For Customers
The fastest approach is the best and most efficient way for customers to pay you. It is easier for customers to pay and manage payments online. When customers have several online payment options, such as mobile payments, debit cards, and credit cards, they will likely pay you quickly.
You can add your online payment link to your invoice. You can put something like a "pay now" button that customers can quickly press to be redirected to the payment section. You can also include other payment options through QR codes and card readers.
Adjust Your Prices
One way to boost your cash flow is by increasing your products and services prices. Increasing prices is something that most companies are afraid of doing. But there is no surety that increasing prices will result in diminished sales, but it could mean increased cash flow.
So, it does not hurt to experiment with prices to determine how flexible your customers are when it comes to prices.
Leverage High-Interest Savings Accounts
Using high-interest savings accounts gives you liquidity while also helping to improve cash flow. Most banks have accounts that can earn you interest.
These accounts operate on minimal requirements on balance. The money market and business savings accounts expect high-interest rates.
Activate Payments Everywhere
In most parts of the world, when customers buy something online, they prefer seeing products before making any purchase. Most customers appreciate Cash on Delivery. While this option is suitable for attracting new customers, it attracts numerous hidden costs.
We have seen high non-delivery rates because of a lack of cash or change; money can be stolen or lost. Also, manual dispute resolution takes time. Using a mobile POS solution instead can help overcome countless challenges that can negatively impact your cash flow.
Final Thoughts: Focus On Boosting Cash Flow In Your Business
The goal of every business is to grow revenue. When you achieve this, you check all the boxes of becoming a successful entity. When you get income every year, you are doing things correctly and can ensure your business's financial health.
By using the approaches discussed above, like implementing software for accounts receivable, you can be sure that your cash flow will increase and your business will survive all the odds and become successful.
