Staying in the black is one of the keys to business success. Try these 12 tips for improving your money management skills.
“I’ve got enough for a year … if I live like Mahatma Gandhi. My accountant says I’ve got no cash flow. I’m not liquid. Something is not flowing.” – Woody Allen in Manhattan
More than anything else in their businesses, smart small-business owners stay on top of their cash flow, monitoring their cash flow statements monthly or even weekly to keep their eye on the pulse of their business. These critical cash flow numbers tell you just how much is coming in and how much is going out of your business.
Making more than you’re spending? It’s all good.
Cash flow regularly edging into the red – Not so good.
If you’ve been less than diligent about monitoring your business’s money, these 12 tips can help you boost your business’s cash flow, so you don’t have to live like Gandhi (unless you want to).
Monitor your cash flow regularly.
Online accounting software such as QuickBooks Online makes it simple to reconcile your accounts, generate reports and more. Because your information is secure in the cloud, you can easily stay on top of your cash flow wherever you are.
Focus on recurring monthly, quarterly, or annual expenses. Can you cut back on utilities, rent or payroll? Are you spending money on subscriptions or services you’re not using or insurance you no longer need? Can you renegotiate the terms of outstanding loans or leases?
Cash in on assets.
Do you have equipment you no longer use or inventory that’s becoming obsolete? Consider selling assets to generate quick cash.
Get a business line of credit before you need one.
A business line of credit is a good insurance policy against cash flow problems. You may be able to get a line of credit for a percentage of your accounts receivable or inventory if you use them as collateral.
Lease equipment instead of buying it.
By leasing vehicles, computers, and other business equipment, you get access to the latest features and avoid tying up cash—but you still get to expense the lease costs on your business taxes.
Stay on top of invoicing.
Send invoices when the work’s completed or products are delivered—why wait? Find out the specific person, job title and address to send your invoices to so they don’t get lost in a shuffle from department to department. Design your invoices so they’re straightforward and easy to read, with key areas like due date, the amount due, where to send payment and payment methods highlighted. Speed things up further by emailing invoices instead of mailing them.
Don’t let travel slow your invoicing.
If you’re on the road and in a pinch, try the free instant invoice creators Invoice-o-matic and invoiceto.me. They’re so simple, you don’t even have to register—just input your info into a template, then generate a PDF you can email to your customer while you’re on the go.
Get paid faster by using mobile payment solutions.
If you sell products or provide services at customers’ homes or offices, get paid on the spot with mobile apps that use your smartphone or tablet to accept payment by credit and debit card.
Speed up payments by offering deals.
Consider offering your customers incentives, such as a percentage off the total, for early payments. Do the math beforehand to ensure the tradeoff (getting paid early) is worth the loss (less money in the long run).
Ask for deposits or partial payments on large orders or long-term contracts.
For example, a building contractor or website developer might charge a deposit upfront before beginning to draw up plans for the project, then charge half the remaining amount when work begins, and the balance upon completion. Charging in stages ensures the company generates enough cash to finance the materials and pay the workers needed for the job.
Delay payments to your suppliers.
Unless there’s a worthwhile incentive for you to pay early, figure out how late you can pay your suppliers without risking late fees or harming your relationship. This keeps the cash in your account and out of your supplier’s until it absolutely has to be there.
Get business credit cards to cushion your cash flow.
Look for cards with rewards such as points you can use toward travel or business purchases. In addition to providing a cushion for lean times, business credit cards also categorize your purchases, so it’s easier to track expenses.
Staying on top of your cash flow is key to your business success.
Don’t let a few cash flow missteps put you in a money crunch. All it takes are a few smart moves to keep your company in the black.
Flex Capital offers Invoice Discounting, Structured Finance and Purchase Order Funding solutions that inject cash flow into your business to you can implement the changes you need to keep doing good business.
The source of this article can be found here.