Cash flow: it is the life line of any business; and growing businesses need it even more.
Despite its importance, many companies find themselves with shining profits on their income statements, and no cash in the bank. This often leads to all sorts of problems that can be detrimental to the business. Cash flow issues obstruct payments for things ranging from suppliers and salaries, to payments for expansion equipment. Below are a few, simple, practical and actionable steps from business growth expert, Verne Harnish, that you can take to improve the status of cash flow in your business.
- Track how cash is flowing in your business DAILY. You’ll learn a lot more about the origins of and possible solutions to your cash flow problems if you keep track on a daily basis.
- There’s nothing wrong with asking for payments upfront – so ask your clients to do that, where possible.
- Invoice, invoice, invoice! Invoice on time, and follow up on payments. Your customers take you more seriously if you do this, too.
- For recurring payments – obtain authorisation from your customers, to debit their accounts every payment period, whether that be weekly, monthly payments, etc.
- Understand why your clients pay you later. They might be unhappy with your product or service, or perhaps an invoice has recurring mistakes.
- Give value back to customers who pay on time or in advance to encourage this behaviour.
- Time your billings to coincide with your customer’s payment cycles.
- The faster you complete projects, the faster you get paid, so shorten cycles for delivery of your products or services.
- Offer a product or service so valuable that it gives you leverage with your customers, to get them to pay you sooner
- Pay many of your own expenses with a credit card and pay it off as cash comes back into your business.
Download this free Cash Acceleration Strategies (CASh) worksheet, to help you brainstorm other ways to get more cash into your business, quicker.