Improving cash flow is one of the most important ways to improve business health. It enables you to keep your business moving forward, invest in new inventory, pay employees, and develop. Yet, cash flow can be held up by a number of obstacles. Consider a few methods for boosting cash flow this year.
Offer Discounts for Early Payments
Customers like a good deal. If you have many that don’t pay on time or pay Net 30 or longer, that limits your cash flow. Offer a small discount to those who pay sooner. This cuts into profits a bit, but it can be better than not having the funds needed to operate your business.
Utilize Factoring
Accounts receivable can hold back many businesses as you wait for clients to pay. With factoring, you can sell your accounts receivable and receive cash upfront to handle your immediate needs. It is the fastest way to get money in to meet current needs. This enables you to get cash in hand for any need without waiting around for customer payment.
Liquidate Non-Moving Inventory
If your inventory isn’t moving, that is keeping more of your business’s cash locked up in assets that are not producing for you. Streamline your inventory to help get more of the money you need, even if that means offering discount or clearance pricing to do so.
Get Invoices Out Sooner
The longer you wait to send invoices, the more time the customer has to hold up payment. Aim to get invoices sent out quickly, ensuring the terms are clearly outlined to ensure on-time payment.
Improving Your Credit Lending
Commercial clients are getting a short-term loan from you when you allow them to pay over 30 days or 60 days. Are you doing anything to verify their creditworthiness for that? A customer credit check may be necessary if you are finding too many of our customers are becoming non-paying or late paying.
Make Payment Easy
Offer electronic payments for your commercial customers. Don’t wait for them to have to send you a check. Rather, offer electronic means of paying, including paying online, in an effort to get payments sooner.
Improving your cash flow through these methods gets the money you need in your hands sooner. Refining your business operations like this enables you to remain in control over how long your commercial clients have to make payment.
