How to Increase Small Business Cash Flow

How to Increase Small Business Cash Flow

One of your biggest concerns as a small business owner may be maintaining a healthy cash flow. With limited resources at your disposal, you’ll rely on ready cash flow to pay for marketing, buy new inventory, buy new equipment, pay your employees, and more. If you’re struggling to find a way to balance the money going out of your accounts with the money going into your business, use these tips to increase cash flow for a small business. 

1. Dispose of old or stock equipment

Old equipment that you no longer use wastes space in your valuable real estate and limits your money. Find a way to sell it or at least get the money to save it. If old stock is cluttering your shelves or storage space, offer a deep discount to make some money off of that. In the future, if you need new equipment, consider renting what you need rather than buying it. This will help you improve your cash flow by allowing you to pay for your devices incrementally rather than all at once. 

2. Start offering discounts

Although discounts may not immediately seem like a great way to bring in money, they can help you manage them wisely. Offer small discounts that won’t affect your bottom line much, but will motivate new and old customers to come back to buy your goods or services. Depending on how you run your small business, you may instead want to offer a small discount to customers who pay early or  incentivize  your  customer referral program with discounts.

3. Send invoices quickly

If your customers don’t have an invoice yet, you won’t get paid. By focusing on getting the bills out as quickly as possible, you will reduce cash flow problems and use that money to acquire new products or services. Consider using accounting software that can instantly convert your receipts and records into neat, straight bills that customers pay, and it can also help you track the inflow and outflow of money 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 checks may be traditional payment methods, but they are not suitable for all customers. Start by accepting multiple types of popular credit cards, and consider adding Paypal, Venmo, Apple Pay, or other services as much as possible. Convenience often speeds up payment times and increases cash flow. 

5. Eliminate long-term payment plans

The majority of small businesses will not benefit from offering long-term payment plans, as many customers find it easy to let these payments slide. Find ways to encourage faster payments for your existing plans, and try to stop acting like a bank extending a line of credit to your future customers. You may also want to consider imposing late payment penalties on invoices that are not paid within 30 days. Of course, never underestimate the power of a simple phone call. You may be surprised to discover that some of your customers have simply forgotten to make the payments or misplaced the bill and are happy to pay. 

6. Consider invoice factoring

If you’re having trouble finding time to get your customers to pay their bills or simply need some cash right away, billing can help. With this method, you sell your accounts receivable to a third party to manage customer debt on your behalf. Although you will lose a little money in the transaction because you sell your accounts at a discount to the factoring company, you will immediately benefit from getting the working capital you need. 

7. Open a savings account and credit card

Savings accounts are not only great places to store cash for upcoming purchases and unexpected needs but they also give you an excellent way to earn a few extra bucks. Although the interest rate on most savings accounts these days is not that high, you may be able to score a better rate if you choose a money market savings account or keep your money in a credit union. A business credit card with no annual fees gives you another way to pay for new goods or services you might need anyway. Choose a cashback card that will earn you money every time you make a purchase, and make sure you pay off your card on time every month. 

8. Think about where you spend the money

If you look at your budget from the past few months, you may be surprised to learn how much money you spend in certain areas. You may get office products that you don’t even need. You may be paying for services you haven’t used in months. Although these changes may seem trivial at first glance, they can certainly build up over time. Small business owners can improve their cash flow by calling the vendors they work with and either canceling products and services or negotiating new prices. 

9. Look at your prices

If you’ve completed all of the previous steps but are still struggling to get the business cash flow you need, your problem may lie in the price of goods or services. It might be time to raise prices if your customer base is strong and loyal. If you struggle to attract clients, your prices may be too high to justify their spending money on your business. Ineffective pricing can cost you a bit over time but it can be discovered and remedied with regular reviews.

Of course, there are plenty of other steps to increase small business cash flow. Finding new ways to sell, such as market online, apply for a small business loan, reduce employee overtime, improve your marketing techniques, and even work with a good accountant can put you back on the best path to financial success for your business.

Digital marketing partners can help you get your small business back on track with everything from driving sales to creating new leads. Use  the Online Business Report  today to see how your business is doing online and discover new ways to market your business, increase your social media presence, and get positive business reviews.

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