Cashflow is the lifeblood of any business, and ensuring that cash is flowing steadily and consistently is critical to its health. This can be challenging, especially for small brands or startups and during trying times. Here are 5 ways that you can improve your business's cash flow, primarily how to get more cash in.
1. Offer discounts for early payments
Many businesses offer a discount for customers who pay their invoices early. This is a great way to incentivise customers to pay sooner, which can help improve your cash flow.
Implementing this can be as simple as adding a line to your invoices that states, "2% discount for payments made within 10 days." You will likely see an uptick in payments made within that time frame.
2. Review your payment terms
Your payment terms can have a big impact on your cash flow. If you require payment within 30 days, that's great! But if you require payment within 7 days, you may be putting too much pressure on your customers (and yourself).
Review your payment terms and see if there is some wiggle room that you can give yourself (and your customers).
3. Offer financing options
Offering financing can help close sales and improve cash flow if you sell high-priced items. There are several financing companies that you can partner with to offer to finance your customers.
This option is not right for every business, but it can be a great way to improve cash flow.
4. Stay on top of invoicing
One of the best ways to ensure that cash flows into your business is to stay on top of your invoicing. Make sure you send invoices out as soon as payment is due for your delivered products and services and send automatic follow ups to customers who haven't paid. You can even split your invoices to 50% payment upon signing and then the remaining payment once the work has been completed. The sooner you can get money flowing in, the better!
In addition, using accounting software can help you keep track of your cash flow so that you
can see where money is coming in and going out. This can be a helpful way to identify any issues or areas where you can improve. Some great accounting software options are available, so find one that works best for you and your business.
5. Budgeting and cash flow management
As a business owner, you know that cash flow is important. But you might not realise that cash flow management is just as important. Having a good handle on your cash flow will help you make smart decisions about allocating your resources, not to mention avoiding cash flow problems down the road.
If you need, our firm can help you with budgeting and cash flow management - both essential to building a resilient business and complete peace of mind.
Cash is king!
Cash flow is critically important to the success of your business, so make sure you're taking steps to improve it. Know your numbers, have clarity in what you're doing daily and take control of your growth. You´ll soon see that the cash will start steadily flowing into your business and you´ll be healthier for it.
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