8 Ways to take control of business Cash flow
Cashflow is the lifeblood of any small business, so they must ensure they are taking steps to ensure they are adapting to preserve and sustain it. This blog discusses some of the ways companies can do this.Return to blog posts
We know running a business can be challenging; balancing day-to-day operations with growth-driving initiatives can put massive pressure on small business owners. And behind the scenes, but at the heart of all this, is cash flow.
Ensuring cash flow stays positive is key to the success of your business, and our Business Finance team recommend you have enough funds to cover up to six months of your average cash outflow.
Easier said than done, right? Here are some best practice tips to help create a steady cash flow to keep your business moving and growing.
- Don’t wait to send invoices. Send an invoice with an automated system such as Bill.com every time you complete work or sell a product.
- Adjust your inventory as needed. Identify items that aren’t selling well and sell them at a discount. Be sure to keep your best-selling items in stock. Not sure which products are going to become your best seller? Explore what you can learn from your consumers – create a ‘coming soon’ product post on your business’s social media accounts and see which one drives the most engagement.
- Lease your equipment instead of buying it. You won’t have to upgrade or try to sell outdated equipment. Equipment leases often qualify for tax credits, which lessen your tax burden.
- Borrow money before you need it. The best time to solve a cash flow problem is before it happens. If your business is running smoothly or is in the beginning stages of production, now is the time to borrow money.
- Re-evaluate your business operations to improve efficiency. Monitor, evaluate, and improve your business operations, such as shipping costs, wholesalers, extra employees, allotted overtime, marketing returns, overdue invoices, and rented equipment payments. As the economy changes, so should your business strategy. For example, meet with new vendors to see if they can provide your inventory and supplies at a better price. Even if you don’t change vendors, you can use the information to ask for better pricing with current vendors.
- Restructure your payments and collections. If all your bills are due the same week, look to change the date some of your bills are due, so you stagger when you pay your bills.
- Monitor where your money is going. Taking on debt isn’t always a bad thing. If you calculate how much debt you can manage so you’re not overleveraged, borrowing money strategically can be a viable option if you have a repayment plan in place.
- Take advantage of technology. Use apps and software to streamline your business processes and increase efficiency. Although technology can help with any sector of your business, at the very least, use it to create budgets and project cash flow.
Need some extra funds to help balance out your cash flow? Whether you need to pay bills, make payroll, or purchase new equipment, our partners, such as WorldPay, Barclaycard and Tide, in partnership with funding experts Liberis, offer a fast, flexible funding solution for small business owners.
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If you want to learn more about partnering with Liberis, feel free to get in touch.
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