When your business faces cash flow problems, your bottom line will suffer. Unfortunately, the occasional cash flow problem comes with the territory of owning a small or medium-sized business. How you manage your cash flow problems can greatly impact the long-term success of your business. Here are a few tips to make your business cash flow healthier.
Try Cash Flow Forecasting Tools
Cash flow forecasting tools allows you to make cash flow projections for the future, typically the coming year. A solid cash flow analysis can help you plan for projected cash flow shortages due to slow seasons or other complex factors such as inventory and accounts receivable. Understanding how your cash flow may change from one month to the next can help you make the best business decisions to create solutions for cash flow problems before they hit. Solid cash flow forecasting looks at risk assessment, offering a full picture of cash flow forecasting for your business.
Increase Profit Margins
One of the fastest ways to boost your cash flow is to increase your profit margins. Take a look at your sales records. Start by raising the price on your bestselling items. You can also eliminate a few of your less popular items and replace them with items that are more likely to sell with a wider profit margin.
Bundle Your Products and Services
Bundling has become a common practice in business. For customers, bundling combines products and services they might not otherwise purchase, giving them added value. Pricing an entire bundle means you can create a price point for the entire package that makes sure your profit margin is covered on all components. Because customers are paying for the convenience of an entire package, this raises the price point further.
Plan for Slow-Paying Clients
Slow-paying clients are a fact of life in the business world. In many cases, these clients always pay, but they do so on a delayed timetable that can hurt your cash flow. Finance companies are available that offer invoice-based financing options to cover the missing funds until your otherwise reliable clients pay. You can also focus on building relationships with your clients and offer incentives that reward faster payment. A discount for paying early can be a powerful incentive.
Set Up Automatic Billing
One of the best ways to ensure your cash flow remains steady is automatic billing. With automatic billing, your clients’ payments will automatically come through each month on the scheduled day. Set up auto billing on your client’s schedule for their convenience. In fact, clients have come to see automatic billing as a convenience that makes paying simpler for them and they even expect it.
Offer Third-Party Financing
Offering financing through a dedicated finance company can give your customers an additional option for paying. Customers see this service as a benefit, and it allows your customer the opportunity to finance your product or service without relying on their existing credit. It also makes sure you get paid immediately. For an added benefit, your company won’t have to worry about following up on payments.
Trim Down Your Extra Expenditures
One of the fastest ways to improve your bottom line is to cut out extra expenses that just aren’t necessary. If you are paying for any services your in-house staff can take care of, these should be the first you cut. Suspending services temporarily while you boost your bottom line may result in these vendors offering incentives down the road to get your business back. When it comes to contract-based services like wireless service and phones, shopping around can pay off significantly.
