8 Ways to Improve Cash Flow and Reduce Your Need for a Small Business Loan
When it comes to maintaining your business’ growth and success, cash flow is absolutely crucial. Even if your company is rapidly expanding, you’re not immune from cash flow issues. Often this is just when the issue can be most acute. Aside from ensuring your enterprise’s survival, improving cash flow serves the additional purpose of reducing your need for a loan. No business owner wants to be burdened by expensive and unnecessary interest payments from loans. Follow these steps to improve cash flow and you may not need to.
8 Ways to Improve Cash Flow
Reducing overhead can do wonders for improving cash flow. Search for anywhere you can save money, from large fixed expenses like rent to smaller fluctuating costs like utilities. Technology is always advancing, so be sure to consider any technological opportunities that can cut costs as well.
Check Your Customers’ Credit
If you offer services upfront or purchase parts or inventory before you get paid, it is important not to get stuck with the bill if a customer walks away or is unable to pay. You are essentially offering to finance your customer, and you want to be sure they’re good for it. To reduce this risk, check your customers’ credit scores to decide if you need to get payment upfront.
Submit Invoices Right Away
This is a simple way to get paid faster. Even minor delays in billing can potentially cause a cash crunch, so be sure to prioritize getting paid in order to improve your cash flow.
Accept Multiple Forms of Payment
These days, technology makes it simple to accept several forms of payment, and your customers are used to having that choice. Don’t wait for a check to arrive in the mail when your customers can often pay their bills with one click. If they choose to pay by credit card, you can add the processing fee so you don’t have an added expense.
Pay Bills Electronically
Ever wish you could have just a little more time before you had to pay your bills? Stop sending payments by snail mail and start paying electronically, which usually allows you to make payments the day they’re due. To give yourself even more time, pay with a business credit card. Often, you will have up to three weeks to pay what you charge to your card, creating more flexibility for your cash flow in the intervening time.
Prepare for Slowdowns and Emergencies
Plan for ways to bring in revenue during your off season and other slowdowns or financial emergencies. By having a plan to get through your business’ slow season, you will be able to improve cash flow when times are tight. If possible, build up your cash reserves for when all else fails and you need more money. This is another key way to avoid having to take out a loan.
While it might seem counterintuitive, testing higher prices for your products or services can do a lot to improve your company’s cash flow. Although there is no guarantee that it will improve your financial situation, oftentimes raising prices doesn’t scare off customers and may in fact increase your perceived value in their eyes.
Get Financial Help
Seeking out qualified financial help, such as the small business bookkeeping and consulting services offered by Tower Books, can help you identify potential cash crunches as well as find ways to increase and improve your organization’s cash flow.
Tower Books’ Cash Flow and Operations Experts Are Here to Help
Tower Books is ready to help your business improve cash flow and thrive in today’s increasingly competitive environment. No matter if you need help improving your bottom line, assessing risk management concerns, or identifying cost savings, contact Tower Books today and get your business on the path to a brighter future.