Cash is the lifeblood of every business. In order for a business to consistently meet its financial obligations to customers, creditors, employees, investors & suppliers, it will need to properly manage its cash flow.
Here are 7 Ways a business can save costs and increase its cash flow:
1. Separate your personal finances from your business finances.
2. Invoice Immediately: If you take your time sending the invoices needed to process payment, your creditors in turn will take their time paying you. Make prompt invoicing a priority.
3. Reward Fast Payment: Offer discounts to quick paying customers.
4. Encourage Down Payments: This tactic helps ensure that at least a percentage of your invoices will be paid. Many small business owners require it.
5. Have a Line of Credit: Having a small business line of credit is helpful for businesses that occasionally encounter cash flow issues. Big banks, small banks and credit unions are increasingly willing to set up lines of credit.
6. Work with a good accountant: Not only can they help with your cash flow forecast, but they can monitor your cash flow, and prepare monthly management accounts.
7. Supplier Contracts: Don’t always focus on the lowest price when choosing suppliers. Sometimes more flexible payment terms can improve your cash flow more than a bargain-basement price.