Around 82% of companies that fail in the US do so because they have too little cash flow that becomes a major hindrance to operations. This is hardly surprising because without money a company can quickly grind to a halt unable to pay for basic supplies, marketing, and even keep the lights on. Here are some basic tips to help you increase business cash flow.
Plan for the Future
One of the best ways to help keep cash flowing into your business is to plan ahead and prepare for low months. This will require a solid savings plan as well as sticking to a budget. There is also good software to help you predict future trends in your cash flow so you can be somewhat prepared. Although future projections are not always accurate, you can at least have an idea of what might be coming in the future.
Followup on Customer Accounts
Slow-paying clients/customers may not seem like a big deal when there is only one or two of them, but if you have several or if the outstanding amount is significant, that can be a big problem for your cash flow. Sending a reminder is a good first step. It might also help to use software to keep track of all of your accounts. Products like robust hospital contract management software identify any and all outstanding accounts, making it easier for you to know when to send notices or take further action.
Invest Excess Cash
If your business is lucky enough to have extra cash, consider investing it into the highest-yielding account you can find. That way you get your money working for you for the future. However, if you need access to it sooner, look for a fund or savings account designed to let you get your cash when you need it.
Outsourcing certain processes within your business is a good way to keep your cash flow moving in the right direction. This is primarily because it can often be cheaper to outsource things like IT support and content creation. Freelancers and other professionals who aren’t on the payroll don’t have the overhead and can offer lower fees.
Renegotiating contracts is a great way to shave off expenses and free up cash. If you are a good client, who pays on time, suppliers may be willing to work with you to create a plan that works better for you. They might also extend your credit limit to give you more money while you are in a slow period.
Have a Sale
If you have the type of business that can adjust the product pricing, consider holding a sale or special buying period to generate more sales. No, you won’t make as much profit, but you will tap into the cash flow that you need to pay bills and stay afloat in the downtime. Not to mention, customers love sales and are usually more than willing to participate by purchasing more. Make sure to advertise your sale in advance and hit all of your channels, including social media, to reach more people.