6 Tips on How to Help Improve Cash Flow in Small Business
Posted by Rushell Kayna on November 25th, 2019
Irrespective of the size of your business small business, it's imperative for you to be attentive to maintain and improve short term cash flow. If the cash flow in your business is subject to fluctuation, it can prove detrimental to the growth of your business.
Most of the times people end up equating their profits with the cash flow. If you think on the same line, you are misleading yourself. Profits and cash flow are two very different things. Where on one hand profits can be counted as net income, cash flow refers to the cash that goes in and out throughout business operations.
If you want to stay in the game for a longer haul and want to improve short term cash flow, you need to look for ways that will help you in maintaining steady cash flow. There are six tips which will help you in improving cash flow in your business. These tips are mentioned as follows:
- KEEP TRACK OF THE MONEY THAT GOES IN AND OUT DURING BUSINESS- It's very important to keep track of all the money that goes in and out. It's so because once you know about expenditures and investments of all the areas, you can decide upon whether they are worth the money or not.
It so happens at times that people face a shortage of cash in the mid of the season. This situation often jeopardizes the business and owners end up incurring heavy losses. But, if you are keeping track of the money, you can avoid such situations and prepare yourself in advance in cases of emergency. You can keep track of software as it’s convenient and simple to use.
- BE QUICK WITH PREPARING INVOICES- What do you do when your customer gives orders in bulk? You feel glad about the sales and prepare the invoice immediately or postpone it for a later date. If you do the latter, you need to change your working habits.
When you postpone the preparation of the invoice, your customers are bound to delay the payment which is going to affect the cash flow. You should always send out invoices as soon as you receive the order so that your customers can pay you even before the delivery of the product.
- INCLUDE A VARIETY OF PAYMENT OPTIONS- What makes a consumer pay on time or before time? It's the convenience of paying through cards or making payments through banking apps present on phone. When you are flexible with the payment options and offer your customers a chance to choose from different options, they pay on time without too much fuss. This will allow you to improve your short term cash flow as customers won't delay in making the payment and you will not face the shortage of cash flow.
- CUT DOWN ON UNNECESSARY EXPENSES- What's the one thing that is restricting you from improving your cash flow? It's none other than the unnecessary expenses that you incur while spending in the least important areas of the business.
You can always choose to reduce operation costs as they take up a huge chunk of money out from the scene and you end up overlooking important areas.
- GIVE INCENTIVES TO YOUR CUSTOMERS- If you learn that you will get vouchers on early payments, what will you do? Off course, you will make early payments to take advantage of the opportunity. If you will love this opportunity, so will the other customers. You can always use this idea for your benefit. You can offer discounts in the midseason to attract more customers. You can also offer them vouchers on the purchase of a certain amount which will encourage them to shop more. While giving out discounts, make sure you don't end up making your customers richer than yourself. Your aim should be to gain profits and maintain steady cash flow and not appeasing your customers with lucrative offers.
- INCREASE THE PRICE OF THE PRODUCTS- If you are not the kind to experiment with prices, now may be the time. When you keep a steady price for a long time, you are bound to make profits which are consistent but never cross that mark. Not only that, but you also start losing out on cash if your customers start losing interest in the product. Fluctuating prices are bound to attract the attention of the consumers and keep them interested. Make sure you inform the customers about the changes in prices. Also, don't make the products very expensive.
Apart from following these six tips, you can also hire the services of a company. A company will come out with a way to help you in increasing the cash flow in your business. If you are wondering whom to contact, you should reach out to Lindon Engineering Services. They offer the best services in the field and have earned a name for themselves.
