If there is one thing that is critical to the success of any business, it is cash flow. Without positive cash flow, your business will struggle to survive and thrive. You won’t be able to take advantage of any opportunities that come your way, and you will find yourself being subject to further charges if you need to go into your overdraft to make payments. So, let’s take a look at some tips to help you improve your business’ cash flow so that you can improve your business overall:
Segment your inventory, suppliers and customers – You are not going to get very far if you try to tackle your cash flow as a whole. As is the case with most things in the business world, you need to break it down into smaller segments for more effective results.
Send out invoices more efficiently – How do you expect your clients to pay you on time if you do not send out your invoices quickly? If you send your invoices out late, it gives the impression that you are not in need of the money and, therefore, your clients won’t be in a rush to pay you.
Enforce payment discipline – You really need to look into your current payment processes. How long does it take for your clients to pay you? Do you have any clients that are notorious late payers? Do you have a solid payment policy in place? Are you getting the correct level of contact with your customers? Do you give your clients several options in terms of payment methods? What is your collections activity? By asking yourself these questions, you will be able to have full clarity regarding your payment process, and you will be able to spot opportunities for improvements.
Consider business line of credit – One effective way to boost your cash flow is to invest in a line of credit. This is a good way to boost your current financial status, enabling you to make more money quickly so that you can improve the pool of funds you have available to you.
Perform a good forecast – Last but not least, this is an essential step if you are to get a good grip regarding where your cash flow is right now and where it is likely to be in the future. More often than not, small companies are not prepared for the costs that are associated with growing their business. If you were to have an effective forecast in place, you wouldn’t have such nasty surprises along the way. It doesn’t need to be a complicated forecast either!
If you follow the advice that has been mentioned above, you are bound to notice positive changes with regards to your cash flow. This will put your business in a much better position overall. You will be better placed to take advantage of new contracts and any other opportunities that may arise. Plus, you shouldn’t find yourself in a position whereby you struggle to pay your suppliers and fund any other financial commitments you have.
*This is a contributed post