Efficient cash flow management is an integral aspect of success for any company. Only by remaining cash flow positive can businesses hope to thrive and grow. Here are some tips on how small business owners can increase their opportunities by improving cash flow.
Streamline Invoice Procedures
One of the greatest impediments to steady cash flow is late-paying customers. To minimize this difficulty, delineate and enforce strict invoice payment procedures. Send invoices out as soon as you deliver products or perform services. Follow these up with periodic payment reminders. Have penalties in place for late payments, and be sure that your customers are aware of the consequences of not paying on time. If you offer large or complex products or services, require security deposits prior to delivery.
Consider Alternative Sales Methods
Think outside the box when it comes to generating income. If you provide recurring products or services, consider offering prepaid subscriptions. Layaway programs are another option. These allow customers to make payments on future deliveries of products or services.
No matter how much income you generate, you’ll only remain cash flow positive if you keep expenses down. For instance, you can save money by attempting to repair equipment before replacing it. When replacement of equipment is necessary, opt for quality items that are used instead of new. Upgrade your software only when absolutely necessary, and whenever possible use open-source software.
Earn Interest with Your Cash
When companies have cash balances, small business owners should keep the funds in accounts that earn as much interest as possible. To ensure that your cash earns maximum interest, delay payments to vendors as long as you can, and transfer payroll funds just before payments are due.
Look to the Future
To avoid unexpected expenses, keep your accounting records up to date and conduct periodic financial projections. If you foresee an upcoming need for which you will be short of funds, build relationships with lenders while your cash flow is still strong.
For more advice to small business owners on cash flow management, contact Star Capital USA.