Effective Ways to Maintain Positive Cash Flow in Your Businessby Emma L. Business consultant
Managing finances is the most important task for a growing company, and especially for start-ups looking to get off the ground and establish a foothold in the competitive market. Most importantly, you need to manage your company’s cash flow in such a way that you can meet your operating cash flow needs, pay your employees, and drive innovation and expansion in the long run.
This is not an easy task to handle, but that doesn’t meant that there aren’t tried-and-tested methods you can use to minimize financial expenditure, fix monetary leaks, and improve your revenue streams. With that in mind, here are some of the most effective ways to maximize cash flow and pave the road to long-term solvency in the business world.
Follow effective invoicing procedures
If you don’t ask for money, you’re not going to get it, simple as that. Invoicing is the most important element of a well-functioning revenue stream, and there is really no excuse for delaying the process. The client won’t care if you’ve sent a late invoice due to poor accounting or any other reason, but they will explore their options at that point and maybe even try to get out of paying.
Needless to say, you cannot let this happen. The key here is to send your invoices promptly and make sure the client or customer has received them. Follow up every invoice with a quick email or text to confirm the delivery, and don’t forget to emphasize the due date in the invoice itself. While it shouldn’t be explicitly stated, the client should be aware of the ramifications of a late payment. You can put that on the back.
Never put your livelihood forward
One of the biggest mistakes business leaders make when trying to boost cash flow is putting their personal finances forward. Don’t do that. Your personal finances have no place in your company’s bank account, not unless money is no object and you can afford to spend it on subsidizing its growth. If you are like the majority of business owners and you care about your own livelihood, you will need to find alternative ways to maintain a positive cash flow.
Typically, a loan is the best way to obtain capital on a short notice, however traditional loans require you to put in some kind of collateral. In recent years, though, reliable unsecured business loans have become more popular among business owners due to their inherent flexibility and the fact that they don’t put your livelihood at risk. You can use a loan to stabilize your cash flow during the low-performing seasons of the year, or better yet, boost your cash flow to take your company forward.
Focus on growing your customer retention rate
Acquiring new customers is expensive. So expensive in fact, that you could be spending five to twenty five times more resources trying to bag a new customer than you would spend nurturing a loyal one. The truth is that recurring business makes the business world go round, so if you want to minimize expenses and actually boost your cash flow over the long term, your focus should be on improving your customer retention rate.
You can inspire customers to stick with your brand through thick and thin by offering stellar customer service, giving them occasional discounts and coupons, personalizing their shopping experience and showing them that they matter as an individual, and of course, using your brand’s identity and values to connect with them on a deeper level. All of these efforts will help you nurture a lifelong relationship with your clientele, and thus prevent your competitors from pouching them behind your back.
Minimize overheads across the board
Overhead expenses might be a necessity, but that doesn’t mean that you should overpay for your business, administrative, or manufacturing overheads every single month without at least considering ways to fix extraneous financial leaks. To minimize overheads, focus on the following:
Manage utilities. Expenses such as gas, electricity and water can be easily reduced if you simply adopt a more frugal mindset or convert to an eco-friendly system. Switching to LED lights, installing faucet aerators, and introducing passive conservation systems such as insulation will prove to be most effective in this regard.
Reduce travel expenses. Business travel is expensive, and it isn’t always necessary. In the tech-driven world, you can easily conduct your meetings via video chat and save money.
Outsource and automate work to optimize payroll. Payroll expenses can make a heavy dent in your company’s budget, so try to outsource menial and even crucial tasks to global freelancers to avoid the costs of keeping staff on full time. Make sure to figure out what you can automate first for maximum savings.
Meticulous cash flow management is imperative for the growth and long-term expansion of your business. While there are many challenges that will try to prevent you from successfully optimizing cash flow, you can rest assured that these tips will allow you to avoid common pitfalls and pave the road to an affluent future.
Created on Apr 15th 2019 07:32. Viewed 596 times.