It can be pretty sobering to look at the failure of businesses. Most ventures don’t make it to their fifth birthday, after all. If you’re a business owner, then it’s important to look at not just the rate of failure, but why businesses typically have to close their doors for good. And invariably, that’s because of cash-flow problems. Even businesses that appear to have a good amount of customers can end up closing due to cash-flow issues.
As such, you can greatly help your business by taking proactive steps to ensure that your cash flow is always in tip-top condition. In this post, we’ll run through some tried and tested methods for doing just that.
Offer an Incentive
It can be tiresome waiting for clients to pay their bills. Not only does it leave your bank balance looking not quite as good as it could do, but it also just requires more work — and there’s no task more frustrating than chasing up a customer with an outstanding balance. One way to get your customers to pay their bills sooner is to offer an incentive for early payment. Could you offer a 5% discount if it’s paid within 24 hours, for instance?
Avoid Buying Expensive Equipment
Your cash flow will look better if you have plenty of money in the bank. Alas, as a business, you will of course need to spend money in order to keep your operations running smoothly. However, how much you spend is often within your control. For example, let’s say you need expensive equipment to work efficiently. Buying that equipment could deplete your bank balance. Instead, it’ll be better to look at leasing the equipment; it’d be much cheaper to lease bulk equipment from Transport Resources rather than buying it outright, for instance. This method ensures you have access to the equipment you need without destroying your finances.
Streamline Your Payment Process
You’ll want to have the money from your customers in your bank account as soon as possible. To do this, take a look at your payment process. If you have an outdated process, then you could be waiting several days or more until the money is in your account. These days, there are plenty of modern solutions that make payments as quick as possible.
Negotiate with Suppliers
Anything that allows you to spend less money should be welcome. For example, take a look at the money that you pay your suppliers. Is there a way to make it cheaper? There are two ways to do this. One is to see if they’ll give a small discount in exchange for early payment — they want to look after their own cash flow, after all. Another option is to negotiate new terms with your supplier. You might be happy with their products/services, but if you’re still paying a rate you agreed to several years ago, then you may be paying more than necessary. So speak to them — they’ll likely be happy to offer better terms rather than losing you as a client.
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