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7 tips to improve your cash flow
Mon 9 October 2017 - 9:33 amCashflow | Expert
Running a business of any kind — whether it’s a large or small, retail or service — follows the same steps to success. One of these steps involves managing your money by tracking and improving your free cash flow — that free flow of post-financial commitment cash and a key indicator of business success. But if business success means being able to freely pay back your investors, your operational costs and yourself, then here are some ways to improve your cash flow:
- Perform a cash flow analysis
A cash flow analysis makes it simple to identify any available cash on hand and patterns that may be keeping you from improving your cash flow. It reveals where your business cash is coming from and where that cash is going. For example, you can determine if your marketing and sales expenses are taking away from available cash. Conduct a cash flow analysis to get insight on where your cash is going to and coming from so you can devise the best improvement plan.
- Introduce subscription payment options
Subscription options are a great way to automate recurring income for your business and boost customer retention. They’re also a great way to demonstrate customer care, since subscription options make it convenient for your customers to pay without needing a reminder.
- Negotiate better payment terms with suppliers
To get enough time to collect your accounts receivables, negotiate better payment terms with your suppliers. Go for the maximum time you are allowed, which usually range from 60 to 90 days. These extra days will give you additional time to collect your accounts receivables.
- Avoid purchasing equipment outright
Buying equipment outright may save you money over time, but if it’s saving at the expense of tying up much-needed cash that can be used to enhance your business efficiency and daily operations, then it may not be worthwhile. Instead, consider leasing your equipment. Leasing equipment provides you with the advantage of keeping more cash on hand while maintaining business productivity.
- Have a line of credit
When your business is short on cash, a line of credit can be a lifesaver. Arrange to have a line of credit in advance of a shortfall. It’ll help you keep your business running as you work to increase sales.
- Use direct debit terms
Solidify cash flow by placing your regular clients on direct debit terms. Direct debit terms make it easy for your existing clients to make seamless payments. You can incorporate payment technology that accepts direct debit payments and even set it up to collect recurring payments. By putting your clients on direct debit payments, you increase your chances of collecting your accounts receivables automatically and on time.
- Use debt recovery tools
If you let debts go unpaid, you’ll risk running out of cash. If you want to get your payments faster, debt recovery tools are the way to go. Debt recovery tools simplify the process of collecting debts owed by making it easier to track unpaid debts. You’ll be able to take action faster by knowing which customer owes money so you can contact them and proceed with collecting payments right away.
Improving your cash flow is vital to stay liquid and to stay in business. That’s why it’s important to take a look at your cash flow by performing a cash flow analysis to assess your activities. It’s equally vital to employ payment technology and flexible options to drive cash flow enhancement activities. Provide payment solutions that leverage technology so that you can collect payments and get paid seamlessly, such as recurring direct debit or credit card payments. By employing these cash flow enhancement tips, your business will be on its way to success.
About the author
Chris Urry, Director and CEO at IntegraPay, has over twenty years’ experience in business and management across Australia, New Zealand, Asia, the United States and the United Kingdom. Chris has extensive experience in providing financial solutions to complex businesses