Every business owner wants to boost cash flow. That’s because it helps keep income and outgoings steady, which helps make running a business as straightforward and pain-free as possible. The great news is, there are several proven ways to improve cash flow that won’t cost you an extra penny – here are three of the most effective:
Change Your Payment Terms
How quickly do your customers need to pay their invoices? Within 30 days of issue? Or 20 days? Cutting your terms to 14 days (or even 7 days) will cost you nothing and will speed up your cash flow cycle. This technique may also help reduce accounts going into arrears; when customers have less time to sit on an invoice before the payment deadline, they are less likely to forget about or neglect payment.
Send Proactive Payment Reminders
There’s no need to wait until an invoice is overdue to follow it up. Sending your customers a friendly reminder the day before a payment due date can cut down on innocent errors – like an invoice being lost or overlooked. It’s easy and free to set up auto-generated email reminders for your customers and it can have a positive effect on your business’s cash flow.
Analyze Your Cash Flow in Detail
Financial highs and lows are all part of most businesses’ normal cycles. That’s particularly true of seasonal retailers – for example, costume stores usually see huge spikes in October for Halloween and Oktoberfest. However, other businesses may find it more difficult to identify and prepare for cyclical spikes and dips.
Conducting a full business cash flow analysis can help with this. By looking into regular spikes and dips, you can better coordinate borrowing, staffing, and marketing efforts to ensure cash flow remains as steady and predictable as possible.
Financial health is a vital part of any successful business and if you’re currently struggling with any aspect of understanding your businesses finances AccountingX can help simply click here and schedule a 15-minute conversation.
