Cash flow is important because it lets businesses meet both immediate and future financial obligations. To improve your business’s cash flow, try implementing some or all of the following strategies.
Monetize Your Savings
A fire-and-forget way to boost your business cash intake is by seeking a savings account with a high-interest rate. Assuming you won’t need the funds in the near future, the contents of a savings account can build up money through interest payments without effort on your part.
Excise Excess Expenses
All businesses incur expenses, but without occasional pruning, unnecessary expenses can linger and eat into the cash flow of your business. For instance, subscription-based software that nobody uses anymore can extract money regularly from your business while providing nothing in return. To counteract this problem, set up a regular schedule to review your recurring expenses and eliminate unneeded ones.
Incentivize (and Make) Early Payments
To get cash from clients and customers into your business’s coffers sooner, you can implement a discount program, rewarding people when they submit their payments early. Conversely, you can approach your suppliers and contractors about whether they’ll offer a discount to your business in exchange for ahead-of-time payments on your part. Either method may boost cash flow.
Promptly Invoice Clients and Customers
After your business has delivered goods or services, send out an invoice as soon as possible. This way, the person or business that owes you money will get the invoice while the payment is still top of mind. Be sure to clearly spell out due dates, acceptable payment methods, and any penalties for late payments.
Research Different Price Points
Some businesses don’t maximize their cash flow because they’re undercharging for their product or service. To get an idea of whether your business is undercharging, try researching what your business’s competitors are charging. That can help you figure out what price(s) will maximize your profits while still being acceptable to consumers.
Looking for specific advice on your business’s cash flow situation? The experts at Speed Funding are available to talk.