In order for any business to succeed it must have a smooth cash flow process in place. A big mistake many business owners make is purely basing the success of their company on its profits. Yet in the early days you need to ensure enough money is flowing through the business for it to simply survive. If your business is struggling with its cash flow, then there are a number of ways it can easily be improved.
Analyze Cash Flow in Segments
Attempting to analyze your cash flow as a whole and see where changes need to be made will prove a largely fruitless task. It will be a lot easier and more effective if you split it up into segments that cover suppliers, customers and inventory. Then each segment can be analyzed independently, such as looking at regular and one-of suppliers to help negotiate the best discount. While for customers you should be able to quickly work out who the best and worst ones for paying invoices on time are, helping decide the best course of action to take.
Enforce Payment Discipline
The main problem a lot of businesses encounter with their cash flow is that late payments from clients leads to a lack of capital to reinvest in the company and help it grow. Therefore, enforcing strict payment terms is an essential thing to do. Clients need to know that it is not acceptable, so resolve any disputes and where possible, offer discounts for those paying early to entice them to do so.
Use Invoice Financing
Another solution to payment issues is to use invoice financing services from the likes of Secure Trust Bank. Here your business can receive the amount owed from client’ invoices up front, with the ability to use the money to help your company grow immediately. For those with slow paying clients or invoice terms that last a month or two, it can be a good option (learn more about accounts receivable factoring here).
Increase Payment Options
Where possible, offer many payment options to increase the speed in which you receive money owed. Being able to receive credit, debit card payments and even cash will make it a lot quicker than having to cash a check or wait 30 days for invoice payments. Payment cards allow you to receive next-day value for goods and services provided. Analyze your company’s cash flow process and make any of these improvements to help your business grow and be successful.