Top 7 Ways to Improve your Cashflow
By Kate Marsden
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Most people have heard the expression "cash is king" but unless you have lots of cash to fall back on, it really is true. Within a small business, it can be the difference between success and failure. Take the issue of cashflow very seriously – never leave it to your accountant or your bank. Here are some ways to help:
- Stock up cash when you have the chance, so you can ride any temporary dips. Too many business owners get excited by cash coming in and spend it too quickly without making sure they have enough set aside for any dips later. Don’t put yourself under unnecessary pressure – if you can build a cash reserve, then do.
- Know what you need to pay the bills and make sure you have this and more to see you through. Make sure when you build your business that you don’t spend things before you know you can cover it – and always build in a contingency for those unplanned issues.
- Research regularly – Start with your finance and loan terms to see if they are best for you based on where you are now, not where you were a year ago. Also look into grants regularly – they can be worth a fortune for big businesses and can tide small businesses over until the money flows through. Think creatively about what is out there and how you can use it in your business – there are grants for new sites, training, recruitment and technology to name but a few. Don’t assume if you have looked once that is enough – what’s out there changes all the time, as does whether your business will be eligible or not.
- Invoice promptly and efficiently – and always chase payments early or incentivise if you have to get them paid early.
- Don’t build excess stock or inventory – even if it costs a bit more in the long run, do you really want a spare 500 of your product sitting in the office?
- Negotiate your own payment terms with your suppliers – even delaying payment for a few weeks can make a huge difference and is worth your time. Better still, see if you can offer your own services or products in exchange rather than straight cash payments.
- Balance your clients and customers out so you never risk being caught short if you lose a major account. Think about how you can invoice so that you get more regular income rather than large amounts infrequently – it is much easier to manage.
Want help improving your profits? FREE reports to help Small Business Owners stop falling for the myths and start understanding the real rules of profits. Download instantly for fast profit results! Kate Marsden is The Profit Mechanic and gives resources, tools and support to Small Business Owners to improve their profits. Read more about The Profit Mechanic here.
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Article Submitted On: March 27, 2012