This is a guest post by Dan Miller.
In order to be able to survive on the market, all the businesses out there need to have a good grasp of their cash flow. This is especially the case with small businesses, which are usually ran with limited resources. So, if you’re running an SMB, you should always be looking for some new ways to improve your cash flow. Fail to do this, and you’ll see your business slow its growth simply because you can’t support it. That said, we made a list of 5 things that have proven to be very effective when it comes to improving cash flow.
Increase Your Margins
Increasing your margins is one of the best ways to improve your cash flow. And the only two ways you can do this are by increasing your prices or decreasing the costs of delivering your product or services. Even though neither of these might seem feasible, you can still raise your prices if you notice there’s a strong demand for what your business has to offer. Just bear in mind that increasing your prices is something you have to be very careful with, since you don’t want to make your customers turn to your competitors. And if you decide to reduce your costs, make sure this doesn’t affect the quality of your products or services.
Lease Real Estate And Equipment
Even though leasing real estate and equipment turns out to be more expensive than buying, doing so is a great way to increase your cash flow. This is the case because if you lease the things needed for your business operations, you’ll be paying in small increments, which can do wonders for your cash flow. And usually, SMBs aren’t really flushed with cash, and if this is the case with you, you’ll simply have to aim at maintaining a cash stream for your day-to-day operations. Of course, once your business starts earning more, you should definitely think about buying real estate and equipment.
Improve Your Inventory
Another thing you can do when trying to improve your cash flow is take a closer look at your inventory. See what’s selling and what’s not, and try to make sure all of your products are moving at the same pace. So, instead of buying more of the things that don’t really sell, you should try to get rid of them. Sometimes, this means you to sell them at a discount. Of course, as every business owner, you probably love your products and you believe that, someday, the demand for these things will magically rise. However, this usually doesn’t happen so try to get rid of them as soon as possible.
Stop Waiting For Invoices To Be Paid
No matter what industry you’re in, chances are your customers won’t be paying you straight away. And why wait for 30 to 120 days to get paid when you can get your money instantly? There are companies that specialize in cash flow finance and are willing to buy invoices from you. This means you’ll get your money instantly and all you’ll have to pay is a pre-agreed rate based on the value of your invoices. What’s so great about invoice funding is that it’s fee-free and simple, which is just what your SMB needs.
Turn To Electronic Payments
Many SMB owners out there have turned to electronic payments, simply because this can help them improve their cash flow. If you pay electronically, you can wait until the very morning when you’re supposed to make a payment. This can buy you some time to earn more money which is always going to affect your cash flow in a positive manner. Moreover, if you use business credit cards, bear in mind that some of these offer a grace period which sometimes can be even up to 21 days long. And there’s no need to say that this is enough time earn more money. Just make sure you don’t pile up too much debt on your credit cards.
Follow these 5 ways and you’ll be guaranteed to see your cash flow improve. And of course, you shouldn’t stop here. Always keep an eye for some new things you can do that are going to help you maintain a solid cash stream.
Author Bio: Dan Miller is a Payments officer with nearly ten years of experience in banking and international payments in the Australian banking sector. He has a masters degree in finance and banking. He is married and also a father of a beautiful little girl. Learn more about Dan here: https://bizzmarkblog.com