One of your biggest concerns as a small business owner may be maintaining healthy cash flow. With limited resources at your disposal, you will be dependent on ready cash flow for paying for marketing, purchasing new inventory, buying new equipment, paying your employees, and much more. If you have struggled to find a way to balance the money going out of your accounts with the money coming into your business, use these tips for increasing cash flow for a small business.
1. Get Rid of Old Equipment or Inventory
Old equipment you no longer use is not only wasting space in your precious real estate but is also limiting your funds. Find a way to sell it or at least to get money for salvaging it. If the outdated inventory is cluttering your shelves or storage space, offer it at a deep discount to make some money off it. In the future, if you need new equipment, consider leasing what you need rather than buying it. This will help you improve cash flow by letting you pay for your equipment incrementally rather than all at once.
2. Start Offering Discounts
Although discounts may not immediately strike you as a great way to bring in money, they can actually help you if you manage them wisely. Offer small discounts that will not impact your bottom line much but that will incentivize new and old customers to come back for your goods or services. Depending on the way you run your small business, you may instead want to offer a small discount to customers who pay off their accounts early or incentivize your customer referral program with discounts.
3. Send Invoices Quickly
Obviously, if your customers do not yet have an invoice, you will not be getting paid. By focusing on getting invoices out as quickly as possible, you will decrease cash flow problems and be able to use this money in obtaining new products or services. Consider using accounting software that can instantly turn your receipts and records into simple yet stylish invoices for customers to pay and that can also help you track money inflow and outflow for your small business.
4. Offer Multiple Payment Options
One way to get customers to pay you quickly is to offer them more payment options. Cash and personal check may be traditional payment methods, but they are not convenient for all customers these days. Start by accepting multiple types of popular credit cards, and consider adding on Paypal, Venmo, Apple Pay, or other services as you are able. Convenience can often speed up payment times and increase your cash flow.
5. Get Rid of Long-Term Payment Plans
The majority of small businesses are not going to benefit from offering long-term payment plans as many customers find it easy to let these payments slide. Find ways to encourage faster payments on your current plans, and try to stop acting like a bank extending a line of credit to your customers in the future. You may also want to consider charging late payment penalties on invoices that are not paid within 30 days. Of course, never underestimate the power of a simple telephone call. You may be surprised to find out that some of your customers simply forgot to make the payments or misplaced the invoice and are happy to pay.
6. Consider Invoice Factoring
If you are having trouble finding the time to get your customers to pay their bills or simply need some cash right away, invoice factoring can help. With this method, you sell your accounts receivable to a third party that will manage customer debts for you. Although you will lose a bit of money on the transaction because you are selling your accounts at a discount to the factoring company, you will benefit by being able to immediately get your hands on the working capital that you need.
7. Open a Savings Account and Credit Card
Savings accounts not only are great places to stash cash for upcoming purchases and unexpected needs but also give you an excellent way to make a few extra dollars. Although the interest rate on most savings accounts these days is not high, you may be able to score a better rate if you opt for a money market savings account or keep your money in a credit union. A business credit card with no annual fee gives you another way to pay for new goods or services that you would need anyway. Opt for a cash-back card that will earn you money every time you make a purchase, and be sure to pay off your card on time every month.
8. Think About Where You Are Spending Money
If you take a look at your budget from the past few months, you may be surprised to see just how much money you are spending in certain areas. You may be getting office supply products that you do not even need. You may even be paying for services that you have not used for months. Although these changes may seem trivial at first glance, they can certainly add up over time. Small business owners may be able to improve cash flow by calling up vendors with whom they work and either canceling products and services or negotiating new rates.
9. Look at Your Prices
If you have completed all of the previous steps but are still struggling to get the business cash flow that you need, your problem may lie with the prices of your goods or services. Perhaps it is time to raise prices if your customer base is strong and loyal. If you are struggling to get customers in the door, your prices may be too high to justify them spending money at your business. Inefficient pricing can cost you quite a bit over time but can be caught and addressed through regular reviews.
Of course, there are plenty of other steps for increasing cash flow for a small business. Finding new avenues for selling, such as an online marketplace, applying for a small business loan, reducing staff overtime, improving your marketing techniques, and even working with a good accountant can get you back on the best path for financial success for your business.
E-Marketing Associates can help you get your small business back on track when it comes to everything from increasing sales to generating new leads. Use our online business report today to find out how your business is performing online and to discover new ways to market your business, increase your social media presence, and garner positive business reviews.