Good cash flow is fundamental to any business that wants to operate smoothly and successfully. According to a recent study, it is found that various small and medium-sized enterprises spend around £1m per year on business-related expenditure. Those include office equipment, staffing costs, office supplies, and rent. This also highlights the importance of small and medium-sized enterprises to have a grasp of their incomes and the expenditure in order to plan ahead and meet the increasing prices. Also, considering unsecured business loans is quite essential.
Your company will very likely find itself struggling to survive without good business cash flow. If your business cash flow isn’t in shape, it is expected to be, though, there are sure ways you can boost it.
Here are five ways to Improve your Business Cash Flow
1) Monitor your financial state
To search for red flags, examine monthly financial statements line by line and take a look at unsecured business loans. Keep an eye on the key health indicators about your business, like changes throughout the gross margin and the turnover in the inventories.
Another thing is to reduce your expenditure. Cutting the outlays would help you increase your business cash flow. It is vital to assess regularly what you are spending and to question whether or not all of the recent costs were necessary. Consider whether or not some of the costs can be reduced, or even whether you could reduce those costs.
If your electricity bills are particularly high, for example, you could switch all the light bulbs in your building to more efficient ones. And, relocate your business to somewhere more affordable when your rent is high. Small, as well as big cuts to your expenditure, can help you improve your cash flow over time along with relocating your business.
2) Advertise your business
Advertising can, however, be a costly task. In the near future, a good advertising campaign must help introduce new customers. The customers are those who buy products after being made aware of both the products on the market. If the product is not marketed, no buyer will find out what products are available and will not purchase the product even if the product has been in their interest. More customers mean more revenue and hence improved cash flow. However, if you are currently short of cash, there are ways you can advertise cheaply, through social media.
3) Establish a good relationship with your suppliers and customers
Good relationships with the customers and the suppliers will help you to get more merchant cash advance from your business. For example, by offering discounts to customers who pay early, you can transform sales into dollars faster. Providers can benefit by extending the terms of payment. Work to improve customer service and ensure a fair amount to suppliers.
4) Focus on inventory management and product offerings
If sales have dropped and stock turnover slows, you must be vigilant in clearing out the stock. Analyze all the product lines while you’re at it to see what is selling and what is just taking up space. Look at your sales force for helping you reduce inventory and get rid of unprofitable lines of goods.
5) Send Prompt invoices
The faster you do the invoicing, the quicker you get paid, which will help you in maintaining a good business cash flow. If you’re existing invoicing system is sluggish and repetitive, look to change or upgrade it to ensure that invoices are quickly sent over to the customers. However, if consumers are inactive or late in making payments, don’t be afraid to send them a note. You might also be able to set up incentives to encourage clients to make payments promptly.
Increase the profitability and productivity for your company by eradicating inefficiencies, increase the price, increased production, ineffective equipment, increase revenue and other waste sources. Employees are the best source of ideas, so involve them.
Through these five measures, you will continue to raise your business cash flow and sustainably develop your business. Have any tips that we missed? Don’t forget to contact us.