10 steps to better cash flow management
You know that cash is the oxygen that fuels growth. Without it, your business could simply tank – despite being profitable. But we understand how hard it can be to manage cash flow properly and free your business from the grasp of business loans and/or investors. Below are a few, simple and actionable steps that you can take to get cash into your business sooner rather than later. NOTE: Most of these don’t need you to make more sales!
- 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. We encourage our clients to do this and it makes a big difference!
- There’s nothing wrong with asking for payments upfront – so ask your clients to do that, where possible. Don’t offer long payments terms if it isn’t necessary. Make sure that cash gets into your bank account ASAP.
- Invoice, invoice, invoice! Invoice on time, and follow up on payments. Your customers take you more seriously if you do this, too. They will be a lot more sensitive to ensuring you get paid on time, every time.
- For recurring payments, obtain authorisation from your customers to debit their accounts every payment period – whether that be weekly, monthly payments, etc. This isn’t just an option for very large “corporate” businesses.
- Understand why your clients pay you later. They might be unhappy with your product or service, or perhaps an invoice has recurring mistakes. Fixing these issues means you get more cash, faster.
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6. Give value back to customers who pay on time or in advance to encourage this behaviour.
7. Time your billings to coincide with your customer’s payment cycles.
8. The faster you complete projects, the faster you get paid, so shorten cycles for delivery of your products or services.
9. Offer a product or service so valuable that it gives you leverage with your customers, to get them to pay you sooner. Tied to this is ensuring you have a differentiated strategy that beats the competition – learn more about that here.
10. Pay many of your business’s expenses with a business credit card and pay it off as cash comes back into your business. But be careful with this one. Use the tips above to make sure you have a regular stream of cash coming into your business. That way, you are sure that you won’t end up with a credit card bill at the end of the month that you cannot afford to pay.
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