Cash flow is the lifeblood of any business. It doesn’t matter whether you’re making thousands of cars a year or running a café business in a small community, if you’re stuck waiting for payment from customers then you can’t pay your suppliers for the next batch of products to sell.
Here are 10 tips to help improve the cash flow in your business.
- Consider giving discounts for early payments.
- Take as long as you can to pay your bills without incurring a late fee.
- Invest surplus funds in a high-interest bearing account or other short term investment.
- Build a cash flow forecast and use it as a basic business tool.
- Issue your invoices as soon as you can.
- Give customers as many options for payment as possible
- Ask for progress payments for longer projects so that you’re not waiting to the end of the job before you can issue the invoice.
- Constantly monitor your stock levels and replace slow moving products with better selling, higher-margin items.
- When things get tight, triage your payments.
- Link sales commissions to invoices paid rather than revenue billed to motivate your sales team to focus on cash flow as well as sales.
To successfully grow your business you need to focus on increasing sales and improving profits, but to survive in the longer term, you need to focus on improving the cash flow in your business.
Our business coaching module Managing Your Cash Flow will show you how to maximize your cash flow potential.
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