How to Improve Your Business Cashflow
With significant revenue gains being just a dream for many small businesses, many entrepreneurs are searching for new and innovative ways in which to improve their company’s cash flow. Improving cash flow is a formula which is simple enough: collect income and receivables as quickly as possible, and slow down and decrease your expenses as much as possible. But, if you’re working to a tight budget and experiencing all the usual money issues that come along with new businesses, how can you best improve your cash flow?
Collect Payments Quickly
There isn’t much that can hurt your business more than clients and customers who don’t pay their invoices on time. If you are relying on these payments in order to cover your expenses, dealing with clients who don’t pay up when due or are consistently late with their payments could cause you to end up being behind on your own payments, creating cash flow issues and even bad relationships between your business, clients and suppliers. Using incentives on invoices, such as a discount if paid immediately or within the next few days, can encourage your clients to pay when due and improve your chances of receiving what you are owed on time.
If you are spending more than you are earning on your business or are just breaking even, you should evaluate all of your expenses in order to discover if there is anywhere that you are cut costs. Don’t just look at things such as paying suppliers and employees – smaller things, such as switching to energy saving light bulbs in the office, can often save you more money than you realise over the course of a few months to a year. If you employ staff, they may be able to give you some great insight into which areas of the business can afford to lose some money.
Hire Remote Workers
More and more businesses are looking to improve their cash flow and cut costs as much as possible by hiring remote workers and freelancers rather than an employed workforce. If you are looking to keep your expenses to a minimum, hiring remote workers is an ideal option as not only does it mean that there are no costs involved in renting and maintaining office space, many remote workers and freelance contractors are paid per-project, even if you plan to work with them for the long term. This can significantly reduce your costs and boost your business’ cash flow.
If your main goal right now is to improve the cash flow of your company, it is important that all of your employees are aware of this so that it is easier for them to work towards a common goal. Making cutting costs and speedy collections a company policy by setting targets and initiatives for those employees who work in these areas of the business can often yield promising results.
Cash flow is hugely important to businesses of all sizes, and keeping costs low and income high is paramount.