3 More Ways To Improve Cash Flow At Your Business
What can your company do to maintain a good cash flow? We answered this question in our last blog. It suggested sending out your invoices immediately, asking your customers to pay early and carefully managing your inventory. But, we were only just scratching the surface!
Here are three more ways to improve cash flow at your business:
1. Anticipate and plan for future cash needs.
The following is a true story. A man owes his friend $100 cash. The man receives his pay cheque and alerts his friend that he has money available to pay him. The friend says he will come by the next day to pick the money up. The next day, the man tells his friend he no longer has the cash as he had to use it for rent. The friend is reasonably upset. In this tale, it is clear that the man has no concept of maintaining a good cash flow. He did not plan for his future expenses.
As Signature Analytics explains, “keeping accurate, timely, and relevant (ART) accounting records allows you to build a forecast for your business based on historical results. At the very least, businesses should be reviewing their cash flow monthly. Being proactive with your cash flow enables you to forecast your anticipated funds and help prepare for historically painful periods or seasonal trends.”
2. Know when to lease and know when to buy.
Not all of your company’s requirements need to be purchased. Do you need the use of expensive equipment to produce your goods? If so, leasing said equipment may help to improve your bottom line. Consider which necessities must be bought over those that can be leased. This will help to save you some much needed bucks.
“In addition to getting access to the materials and spaces your organization needs to be successful when you choose to lease those items, you won’t have to tie up significant chunks of your capital,” says Brandon Chu on Bplans.com, “In other words, your business will be better positioned to respond to new opportunities and address unforeseen challenges.”
3. Manage your accounts payable process.
Another major factor in maintaining a good cash flow is minimizing costs. One way to do that is to extend payments to suppliers. By paying smaller increments over time, you will be able to have more liquid cash on hand. As Signature Analytics advises, business owners should try to get to know their vendors and extend payment terms as long as possible.
“Most vendors will ask businesses for net 30, but once you build up a positive relationship, they may be more inclined to offer net 45 or net 60,” informs their website, “After all, the longer you have to pay, the more time you have to get money in. You can use a simple payment agreement template to help you when creating your financial contracts.”
Do you need help with improving your company’s cash flow?
Synergy Merchants’ unique merchant cash advance program can help you. To learn all about it, please don’t hesitate to call us at 1-877-718-2026 or email us at firstname.lastname@example.org. You can also apply online for a free, no obligation quote!