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How To Improve Your Company’s Cash Flow Situation
To run a successful business, you need to be making more money than you’re spending. Tell you something you don’t know, right? The simple concept of generating profit isn’t so simple when put into practice. It’s all about having a strong cash flow. The flow of money in and out of a business is a process that requires constant and strict attention. It’s really not as easy as the concept makes it appear.
Managing cash flow can feel like juggling flaming swords while riding a unicycle! So what can you do to improve your company’s cash flow situation?
Master the art of forecasting.
No one is expecting you to be a psychic. But if you could look into a metaphorical crystal ball to predict your income and expenses, you’d certainly be helping your business. Work to identify potential shortfalls and take proactive measures. Don’t play guessing games. Use accounting software to track your historical data and create detailed projections. Be sure to regularly update your forecast to reflect any changes in your business environment.
“Analyze your past operating expenses and compare them to your expected revenue to determine what your expected operating costs will be in your forecast,” advises FreshBooks, “Operating expenses include office rent, business insurance, office supplies, salary and benefits for employees, and more.”
Speed up your receivables.
Isn’t it annoying when payments are due and those responsible for paying are dragging their feet? Don’t be afraid to poke them – figuratively speaking, of course. It’s simple. The faster you get paid, the healthier your cash flow. It’s wise to implement strategies that encourage quicker payments from your customers. For example, you can offer discounts for early payments, send out invoices promptly and follow up on overdue accounts.
On Forbes.com, Rohit Arora suggests that you secure pre-payments. “Depending on the type of business or the size of the order, asking for a sizeable deposit before processing an order or beginning a project is a great way to keep ahead of cash flow,” he writes, “Consider making it a permanent part of your sales effort. Offering a discount for advance payment is a way to incentivize customers to pay upfront.”
Trim the fat.
Are there any expenses you can cut? Take the time to review all of your spending so that you can identify areas where you can cut costs. Look out for recurring charges that can either be reduced or eliminated. We’re talking about subscriptions, memberships or utilities. As well, work to renegotiate contracts with service providers so you can get better rates. Even the smallest of savings can add up over time. This will free up more cash for your business operations.
My Business recommends renegotiating with suppliers. “Over-paying suppliers can really hurt your cash flow,” affirms their website, “Talk to your long-term suppliers to see if you can negotiate more favourable deals. Extending your supplier payment terms, for example, can give you more time to pay your bills. This could help to ease short-term cash flow bottlenecks. You could also ask your suppliers if they would consider offering a discount for early payments.”
Secure business funding.
Synergy Merchants’ unique merchant cash advance program has a long history of helping business owners to improve their cash flow situations. To learn all about how our program can help you to enhance your cash flow, please don’t hesitate to call us at 1-877-718-2026 or email us at info@synergymerchants.com. You can also apply online for a free, no obligation quote!