It takes money to make money, and you need a steady flow of cash to maintain smooth operations—you have vendor payments, wages, overhead, marketing campaigns and a host of other expenses you are responsible for. Many businesses suffer, not because of lack of sales, but because of poor cash flow management. If things seem a bit tight lately, here are some tips for freeing up that cash you so need to grow your business.
Track Your Cash Flow
The first step in improving your cash flow more successfully is seeing what you are working with. Sit down with your books and analyze your financial situation to identify the cycles of your business. You will likely see some patterns emerging that can be very helpful in managing your money better—you can identify optimal times for borrowing money, when to step up or pull back on marketing and determining the right amount of staff, for example.
Arrange a Line of Credit
A line of credit can be very handy in managing emergencies and gaps of time when you are waiting on money. Having one in place ready to use, is a much better way to get the cash you need than facing a crisis and trying to get a fast loan in the moment—you may end up with less-than-optimal financing that will cost you. Lines of credit tend to have competitive rates, you only draw on the money when you need it, and you are only paying interest on the amount you currently borrowed. To find out more about how to apply for a line of credit, visit this website: https://dailipay.net/
Optimizing Receivables Management
If you are not getting paid in full before providing goods or services, optimizing management of your receivables is a top priority when it comes to addressing cash flow problems. There are a few ways to go about this, and the nature of your business will determine the most optimal methods. Ask for a deposit when orders are placed. Give discounts for early payment of invoices. Invoice immediately rather than doing them in batches at set times during the month. Do credit checks on customers before taking them on. Track receivables with accounting software so you can easily identify past-due payments and get on top of that immediately. If you encounter problem customers, do not extend terms any longer—request payment beforehand or on delivery of goods or services. Do not worry about losing customers that cause financial headaches.
Look Into Outsourcing
Outsourcing has become something of a dirty word in the business world, but it can be a valuable resource in improving cash flow; with advances in technology, it is easier than ever to do a variety of jobs at a distance, and virtual assistants can be a cost-effective way to complete the various jobs you need done at a fraction of the cost compared to keeping on full-time or even part-time staff. You pay them as you need them and that is it.
Optimizing your payables can also help improve your cash flow; do not pay bills before you need to, unless early payment offers some significant benefit. If vendors extend 30 day payment terms, do not pay the bill as soon as you get it. Hold onto that cash for as long as you can. Going with the lowest price is not always the most effective way to save money and improve cash flow—a vendor who charges more but offers more flexible payment terms may be the better bet.
Dealing with Cash Flow Crisis
If you are in need of a fast cash infusion, there are a variety of options available to you, but all come with a cost, so you must weigh your options carefully and choose the providers of such services wisely. One popular path is the utilization of receivables finance services, where a financing company pays you a percentage of an invoice upfront and pays you the balance, minus their fee when the customer pays the bill. Get more tips and tricks about growing your small business on this dedicated website: https://newstable.org/.
Kelli Cooper is a freelance writer who blogs about a variety of small business topics.