Improving cash flow is a priority for any type of business, big or small. Ensuring that you get cash paid from your customers into your account as soon as possible is key to ensuring that you can sustain a successful business as well as enabling you to pay employees and suppliers on time without hesitation. Unfortunately, it’s not too uncommon for businesses to face cash flow problems that can cause serious stress and further problems. In this latest blog post, we’ll be providing you with 7 proven ways to improve cash flow in your business that you can start implementing straight away.
Send Invoices Sooner
Let’s start with one of the easier steps that you can act on right away. Are you giving your customers enough time to pay their invoices on time? Sending out invoices at least one week before payment is due is highly advisable. This may sound rather obvious but giving customers enough time to pay their invoices is a proven way to improve cash flow in your business. For example, if payments are due on the last working day of each month, send them out on the 23rd or 24th if you’re not already doing.
Get Paid Faster
You set up your business and do things on YOUR terms. So why are you waiting so long to get paid what you’re owed? The good news is that there are ways that you can get paid faster. The first thing you can do to get paid faster is reducing your payment terms to suit your preferences. If you currently don’t have any payment terms in place, customers may be exploiting this and taking as long as they like. As a general rule of thumb, we recommend giving your customers no longer than 14 days to complete payment if you’re looking to improve cash flow.
Create Additional Income
When was the last time you took a step back and thought about additional ways to increase revenue? Relying on just one revenue stream could potentially be harming your cash flow but on the flip side, introducing new revenue streams could seriously improve your cash flow. An easy way to do this is to listen closely to your customers’ needs and requirements. If there is something that they are asking you for on a regular basis that you don’t currently provide, but you have the capabilities to provide, this is a clear opportunity and gap in the market to add to your current list of services.
Make It Easier To Pay
How easy are you making it for customers to pay you on time? Reducing and eliminating all potential obstacles to payment is paramount to improving cash flow in your business. People have busy lives, and whilst this is no excuse for late payments, you want to make it as easy as possible for them to complete payment. One of the best ways to do this is by using services such as Stripe or GoCardless where you can get customers to set up a direct debit. This will also save you a lot of time and prevent you from wasting time with payment follow-ups.
One of the biggest cash flows that a business can face is often due to extensive expenses. When was the last time you reviewed all expenses to see what is still essential and necessary to run your business? We recommend going through your expenses list and prioritising your most important expenses to the least important. By the end of this activity, if there are any that you can downgrade or eliminate, we recommend doing so, as long as it doesn’t damage the quality of your service of course!
Consider Price Increases
When was the last time you increased your prices? If you haven’t increased your prices in a while, it’s well worth undertaking some market research into rival competitors to see what they are selling their products or services for. We then recommend increasing your prices to match or exceed that. Believe in your business and the value you are providing, and improve your business cash flow as a result of doing exactly that.
Consider Credit Checks
This works for certain sectors better than others but is a valuable point worth mentioning. Undertaking credit checks is ideal if you run a service-based business and undertake client work. Undertaking credit checks are one proven way to quickly identify a low-value client and poor credit score. From these credit checks, you can safely assume that you won’t be receiving payments on time.
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