December is a very busy month of the year for most businesses. However, there are…
Maintaining healthy cash flow is the lifeblood of any successful business. It ensures that you have the resources to cover your expenses, invest in growth and weather financial storms. While conventional methods like budgeting and reducing expenses are essential, there are some unconventional ways to keep your cash flow steady.
Here are four unique tricks for business owners to keep the money flowing:
1. Transform your business into a subscription-based model.
This approach can provide a steady stream of income, reduce the peaks and valleys of traditional sales cycles and improve customer loyalty. Whether you offer software, physical products or services, subscriptions can provide predictability in your cash flow. For instance, if you own a boutique clothing store, offer a clothing subscription service. Allow customers to pay a monthly fee in exchange for a curated outfit or a set number of items.
“Research by McKinsey & Company estimates that the subscription ecommerce market has grown at a compound rate of 60% per year since 2014,” reports NetSuite.com, “Whether you’re a services-business or a product-based business, having a recurring revenue stream as part of your business model, whether that’s at 100% or it’s a hybrid revenue mix, has several advantages…Subscriptions generate recurring revenue, which results in more consistent cash flow.”
2. Offer “dynamic discounts”.
Dynamic discounting involves offering early payment discounts to customers or incentives to suppliers for early payments. For example, if you typically give customers 30 days to pay their invoices, you can offer a 5% discount for payments that are made within 10 days. This can motivate customers to pay you faster, improving your working capital.
“The ‘dynamic’ element refers to how the discount amount varies depending on the date of early payment to the supplier,” explains Stenn.com, “Typically, the earlier a payment is made, the greater the discount.”
3. Shed assets that aren’t critical to your business operations.
What do you own that simply isn’t making you any money? For example, if you own a restaurant, you might want to sell your underutilized kitchen equipment. Another option is leasing your property instead of owning it. These actions can free up cash that was previously tied up in non-essential assets. By becoming more asset-light, you reduce overhead and release valuable capital that can be reinvested in your core operations.
It’s also a good idea to check your inventory to identify items that aren’t selling well. “These products harm your cash flow, as the cash you’ve spent to obtain them isn’t converting to sales and thus revenue,” notes Skye Schooley of Business News Daily, “You can address this cash flow concern by selling these less-frequently-purchased items for discounted prices and not buying additional stock after you deplete what you currently have.”
4. Apply for a merchant cash advance.
For many years, Synergy Merchants’ unique merchant cash advance program has been helping small and medium-sized Canadian business owners to maintain better cash flows. For information about how our program can help you, 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!