3 Ways to Improve Your Cash Flow
It is common for small businesses, especially in their early stages, to have difficulties with cash flow. Always remember to check your financial pulse on a regular basis. If you realize that the cash flow of your fledgling company is ailing or inconsistent, be proactive and take the steps necessary to remedy the situation. Here are some ideas to help you.
Hire a Professional
Hiring a financial professional to help you handle the revenue, expenses, and other aspects of your pecuniary operation is a worthwhile investment. Good accountants are able to analyze income and outgo, anticipate problems, and help you plan for upcoming exigencies such as bill payments and taxes.
Encourage Early Payments
If you have slow-paying customers or clients that have insisted on 30- to 60-day payment plans, give them incentives to pay earlier. Offer discounts for those that make advance payments, and penalize customers that are delinquent in their payments. Be sure that they are aware of these stipulations by communicating with them clearly. If customer remittances are overdue, contact them, remind them of the oversight, and set a new payment target date. For larger orders that significantly impact your cash flow, require that a portion of the invoice be paid in advance.
One of the best ways to maximize your income is to cut down on your expenses. Regularly review vendor costs, and balance how much you are spending on advertising campaigns with the results in sales. Instead of buying new equipment, look for quality used items from local classified ads or businesses that are selling off their assets. Another option is equipment leasing, which reduces costs, potentially allows tax deductions, and enables you to upgrade to newer equipment much more often than if you purchased it.
For more advice on cash flow and other aspects of small business finance, get in touch with Smart Capital Lending Group.