Solid cash flow is paramount to a company’s health. It’s the measure of an organization’s ability to pay bills, payroll, and various liabilities. Positive cash flow is an excellent indication of growth and is necessary to make new investments and explore new opportunities. So how can your business improve its cash flow?
Don’t Be Afraid to Negotiate
The stated price doesn’t have to be the final price. Talk with your suppliers about discounts for buying in bulk or find lower shipping rates. You can also discuss the possibility of payment plans to spread out the impact of a big purchase.
If you’ve been loyal to each other, there’s no reason your suppliers shouldn’t at least consider cutting your company a break.
Collect Outstanding Invoices
The longer customers go without paying, the more your financial security takes a hit. Your ledger needs to be up to date, and this means that any payments you’re due need to come in, especially if you’re getting ready to do your taxes.
If your customers are having trouble paying, you can take a cue from tip one above and offer a payment plan or an alternate way of paying.
Make Paying Easier
One of the reasons many businesses don’t get paid promptly is that customers have difficulty figuring out how to pay. Maybe the company’s website is obtuse or the payment options are too few.
To avoid this problem, offer more online payment options and make them obvious on your site. The fewer button clicks required to find out how to pay you, the better. And if you’re still relying on paper checks for payment, it’s time to go digital!
When announcing a product launch, you can offer deposits to get at the front of the line. Early adopters want to be at the leading edge, and often they’ll be happy to get premium treatment if they can pay for it.
If you’re a company that builds to order, you definitely need to start taking deposits. Not only does this give you some extra cash but you are covered if the buyer decides to change their mind on some key features to lower the final price.
Offering discounts doesn’t just mean having a sale on slow-selling items, though that is important. If you have inventory that is difficult to move, it’s taking up space in your warehouse and actively losing you money. Let it go for a reduced price and get better-selling items in its place.
But an excellent way of improving cash flow with discounts is to reward customers who pay early. If your long-time customers pay their bills well before the due date, give them a discount for doing so! This will create an incentive for your customers to give you the cash you need as quickly as possible.
Lease Instead of Purchase
Usually, the financial advice you hear is, “Don’t lease! It’s a terrible deal in the long run!” While this is still true, there are some exceptions.
If you’re struggling to keep a stream of cash going, you may have to enter into a lease deal for some needed equipment. This will buy you some time, but you will have to work a little harder to get out of leasing as soon as possible. The good news is that you can write lease payments off as business expenses on your taxes.
Get a Business Credit Card
A business credit card can free up cash for other necessities and also provide rewards programs that can benefit your bottom line. Just make sure you keep track of expenses, and you may end up getting cash back on your purchases.
Spread Out Bill Payments
If you pay your bills all at once, you’re going to be losing a large chunk of useful cash every month. If you stagger your bill payments, you can keep the cash outgo to a manageable and predictable level.
It’s important to negotiate these bill payment times first — you don’t want late charges for missing payments. Because this advice is the same advice many other companies get, you might even be able to get a discount for paying bills early!
Raise Your Prices
If you’re selling lots of products but they’re not bringing in as much money as you’d hoped, you can raise your prices slightly. You might lose some customers, but the increased price should make up for it. This has the added benefit of leaving you with more manufacturing capacity and more time to develop new products.
Turn to Finical for Your Credit Card Processing
You can’t work on your cash flow problems if you can’t get cash flowing in! Finical works with businesses just like yours to find the ideal credit card processing solution. We’re proud to be part of the growth of so many businesses by offering flexible payment solutions. If you’re ready to get cash flowing like never before, Finical is ready for you!