Let’s face it. Cash flow is the lifeblood that sustains any business. Business owners oftentimes assume customers or clients will pay in a timely manner but when they don’t, we don’t want to rock the boat by asking for payment. Cash flow management is vital, but if done poorly, many businesses may be faced with closing their doors.
The strategies on how to secure consistent cash flow include:
- Get Customers to Pay on Time: This could be done by sending reminder emails, have a database, to keep you updated on, when the money is coming, and when it is due.
- Increase your Pricing: Take a look at your product and see what you can do to make it more valuable so that you can increase the price. You can also consider bundling. Bundling a high-end product and a low-end product and charge a bit higher than when they are sold separately. Some people, the market determine the price (price takers). If your cash flow is poor, then consider increasing your price. In some businesses where there is strict price competition, if you increase your price, your customers will move to your competitors.
- Expand Your Market: Remember that, how much cash flow you have is also a function of how much sales you’re making. If you are not making enough sales, you need to pay attention to that. Think of how to expand your sales market.
- Good Customer Service: If you are in the service industry, you are selling a sense of satisfaction. Your customer service strategy has to be a killer strategy such that people will come to you because they just had a good experience doing business with you. You need to focus on what is valuable to your customer and play around with that value and ensure that your customer’s service is top-notch.
- Consider Invoice Financing: This involves third party lenders giving you funds to cover the cost of your unpaid invoices. It helps businesses to borrow money against the amount due from customers. This process increases your cash flow, pay employees and suppliers, and reinvest in operations and growth earlier than they could if they had to wait until their customers paid their balance in full.
- Send Your Invoices Early: Faster invoice processing with accounts payable automation gives you up-to-date information about where your money is. Sending your invoice early prompts payment and it also reminds your clients of the work completed or goods provided. They are also useful as a record-keeping tool.
For you to understand your business, you need to have a proper accounting structure that allows you have a thorough organization of your numbers, what is going on in your business, your cost structure, marketing technology, etc., these help you to plan your cash flow.