If you run a business, then you’ll be all too aware of the possibility of failure. The long-term success rate of a business is not high, after all. When you look into the reasons for these failures, you’ll typically find that it came down to one of a few recurring issues. One of these is cash flow.
Having cash flow problems can cause significant issues for even largely “successful” businesses. You might be making a lot of sales, but if you can’t afford to pay your bills due to cash flow, then you could be in trouble.
Happily, there are things you can do to help improve your cash flow. We’ll take a look at some useful tips below.
Get What You Need, Not What You Want
It’s easy to get carried away when your business begins to find some success. You may decide that now is the time to buy some fancy equipment or get a prestigious office in a desirable location. These things can greatly impact your cash flow and are generally best avoided, when possible. It’s best to have a ‘get what you need, not what you want’ philosophy, which will help prevent you from overspending on things you really don’t need. If you do need fancy equipment, then look at leasing, rather than buying outright — your cash flow will thank you.
Make it Easy to Pay
The problem isn’t making a sale. The problem is getting the money from those sales. If you sell B2B, then you might be waiting a long time for your invoices to be paid, and if that problem hits at the wrong time, then you could run into cash flow difficulties.
The key here is to make it as easy as possible for your customers to pay you. After all, the easier it is, the sooner they’ll do it. By incorporating a trusted payment gateway service into your operations, you can ensure that your customers have no reason not to pay you as soon as possible. You may also offer an early payment discount as an additional incentive.
Negotiate Your Supplier Terms
Companies run into cash flow problems because they have to give money to their suppliers while they’re waiting for money to come in. While there’s often no way to avoid paying suppliers, you can influence the amount that you have, and the general payment terms.
If you’ve proven to be a reliable customer, then you could consider asking for better terms. If they say no, then it could be time to look elsewhere. It’s a good idea to brush up on your negotiation skills first, rather than just bluntly asking.
Raise Your Prices…Carefully
Finally, consider raising your prices. This is the easiest way to improve your cash flow. Of course, this step has to be managed carefully — a sudden and significant price hike will do more harm than good. But if you can increase your prices subtly, then you’ll be increasing your cash flow without annoying your customers.
