Cash flow can plague both start-up and well established businesses. Keeping cash flow on track can be a struggle for many business owners because every week, funds go into paying for inventory, wages, business premises and marketing efforts. Nevertheless, your company needs to have a healthy cash flow in order for it to run smoothly. You won’t be able to purchase new inventory or pay your employees without sufficient cash at hand.
It’s common for businesses to encounter seasons when sales will slow down. However, there are several things you can do to boost your cash flow and keep your business running. They include:
- Keeping a close track of in-flow and out-flow of cash
It’s impossible to improve your cash flow without having a good knowledge of the current financial processes of your business. You need to keep track of the deposits and expenses you make every day. Taking time to analyse data will help you discover the areas that are consuming a huge chunk of your money, you can then take steps to minimize costs. It will also help you spot particular cash flow patterns that you need to prepare for to avoid ending up in an unfavourable situation.
- Launch a promotion
You can increase your cash flow by bringing in more business. Organise a sales promotion targeted at making people develop interest in your services or products. In order for the event to be successful, you need to raise awareness about it on various marketing channels. However, before launching a promotion, ensure that it won’t affect your cash flow in a negative way.
- Bring down your inventory levels
Many ventures can keep a large amount of cash tied up in products, products that will just occupy space in the store or warehouse. When money is tied up this way, it can be a struggle to get necessary funds needed to buy more goods. You need to find ways of bringing down your inventory levels. Check the history of your sales data for products that don’t sell well and their quantities. Also keep note of products that your customers are frequently asking for so you can know which supplies you should be getting instead. Always perform regular stocktakes, you can use a software to do this.
- Focus on accounts receivable
The failure of customers to pay their bills on time can obstruct your cash flow. If the number of unpaid accounts is high in your company, put more efforts in making customers pay. You can start by sending notices and reaching the customers via phone. Often times, you can motivate customers to pay by simply reminding them of their overdue bill. If all your efforts to make them pay fail, seek the assistance of a professional.
- Lease or sell assets
Consider leasing or selling assets that you don’t need or are not using in order to get extra cash flow. For instance, if you have extra space or extra equipment in your office building, you can lease it to other companies for additional income.
This is not an exhaustive list but you can definitely get your cash flow back on track by following these tips. While at it, ensure that you have a business that is well protected so that you will have peace of mind to focus on other demands of your business.