It’s been said that more sales fixes a lot of problems in a business. Yet, counter to common sense, cash flow isn’t necessarily one of them.
As many business owners know, in addition to sales, there are many variables that affect how cash comes in and goes out of a business. Here some of the most effective steps you can take to improve your business’s cash flow.
- Reduce overhead. While it may seem obvious, it’s worth stating. If you’re trying to improve your cash flow, look first at your expenses. Make cuts. Fixed expenses such as rent, phone bills, staff and technology support all affect the bottom line. Though these may be essential to operating your business, the amount that you spend on them should be easily supported by your monthly revenue. If not, then you will easily get into cash flow problems with any small hiccup in sales.
- Invoice quickly. To avoid cash flow crunches, invoice as soon as you are permitted to. Even if the client may take up to 60 days to pay, there should be no reason why you wait more than a day to send that invoice. There are numerous ways of sending an invoice. Online invoicing software makes billing easy with features that free you from the hassle of printing and mailing invoices, while streamlining your billing process. Here, from the small business experts at American Express Open, are some additional ideas for improving your invoicing process.
- Make collections calls. Don’t let your accounts receivable get out of control. If someone is late paying, call them without wasting time. Be friendly, tactful and polite when asking to get paid, but do not be shy about asking for money. Your customer agreed to your payment terms, it’s your job to make sure they pay you on time. When you call to collect a late bill, make sure to mutually determine a date when you can expect the payment. If you feel that collecting late payments could harm your relationships with your clients, then have someone else make those calls for you.
- Take credit cards. Doing this will help expedite the process of receiving money by eliminating snail mail and paper checks. It also allows your customers to gain reward points when they buy your service or product. It’s a convenience for both parties and certainly helps with cash flow and saves you time.
- Calendar everything. In order to achieve this level of managing cash flow, attention to daily deadlines is essential. Using your calendar system, make it a habit to indicate in the future what is due and when. From bills to jobs in progress. To increase your sales and afford you the time to get everything done, proper time management will be key.
These tips are just a few of the many tweaks that can be done to optimize your company’s cash flow. With more money in a company comes even more opportunity. It can mean more investment into the company’s staff, technology and services. It can mean more money for marketing and advertising. It usually also means a happy business owner.