Quick Ways to Change Your Business Cash Flow
For any small business, cash flow can be a real problem.
If there is a lack of it, then it can affect how much you’re able to do business and to grow and expand. Finding the fine line between spending the money that you need to and being paid by clients on time is tricky, especially if you have clients that regularly pay late or are having financial difficulties themselves. So if there is a ‘blockage’ in your cash flow, you need to act fast to avoid it getting worse. But what are the steps to take to try to avoid this in the first place? Here are some ideas.
Send Invoices Promptly
If you have so far been waiting until a certain date to invoice or holding off for some other reason, then now is the time to stop. You are quite within your rights to invoice a client as soon as a job is completed. If your business works on time spent doing something, rather than a completed job per se, then change your invoicing method to weekly or fortnightly instead. When you’ve done half of the time taken, invoice for that first half. It will mean the client is obliged to pay your invoice sooner rather than later which will improve your cash flow no end.
Consider an Interim Loan
If you need some money to bridge the gap between invoices being paid and needing to get new machinery or inventory, then looking at business loans could be a good idea. The difference with this kind of loan is that you know you’ve got money coming in but just need to have the cash upfront, so make sure you budget accordingly. Even places like PayPal are offering their business customers this kind of loan to help improve cash flow. Having approved finance is better than going into emergency overdrafts or credit cards that could charge you more in the long term.
Offer Quick Payment Rewards
If you have repeat custom from a client who isn’t the best at paying on time, then you could choose to offer them an incentive if they pay within a set amount of time. When there isn’t an incentive to pay early or even on time, then people will put off doing so until it gets to the point where they really have to. Even a small discount of 1 or 2% can be enough to make sure that you’re paid quickly, in order to make sure that your cash flow improves and you have enough for all of the business’ needs.
Pay Bills When They’re Due
When you’re running a business, no doubt there will be some things that you have to pay on time too. Things like phone bills, utilities, and broadband, as well as any supplier contracts. So it makes sense to pay them on time first of all, so that you don’t get any late fees. But second of all, it will help your cash flow if you know when the bills need to be paid each month, and you are keeping the money in the business for as long as possible.
Partial Payments Upfront
If you have a big job or account coming up that will take quite a while to finish, the thought of going without that cash for a while can be tricky. So in cases like this, it could be a good idea to ask for a partial payment upfront. It doesn’t have to be a lot, but ten or twenty percent can be just enough to help you to keep the cash flow of your business going, as well as providing you with enough to get the job that you need to do done.
These are only a small selection of things that you can do to help improve your cash flow and get things moving again. They are things that you can start looking into today that are pretty simple and easy to implement, but can go a long way to making a difference. The reason you want to look into it is that the wrong kind of debt management and/or poorly controlled inventory can be some of the biggest things that stop your business from working as it should. So it is a good idea to look at all you can do to make sure that cash flow isn’t a killer for your business. What ways will you look to change your cash flow from today? It would be great to hear what you think.