Even the most successful businesses can be hit with cash flow problems on occasion, and small businesses are even more likely to have this issue, so it’s important if you want your company to be a success, that you do everything you can to improve your cash flow situation.
With that in mind, here are some simple things you can do to improve your company’s cash flow starting now.
Lease instead of buying
You may really need that flatbed truck for transporting building materials for your crew to use or you may not be able to function without that industrial screen printing machine, but do you really need to own it? Leasing is a great way to improve cash flow because you are only required to pay a small amount each month instead of a huge cost upfront. This means, when times are tough, you have more available in the bank account to see you through. It may seem counterintuitive, but it can really work well.
Chase up invoices
If you need money right now, then you’re going to have to get more serious about chasing up those clients whose payments are overdue. Non-payers are a huge pain in the butt, but there are strategies you can use to get them to cough up, including offering them a discount if they do so within X number of days. If your finances aren’t exactly fighting fit, it may be necessary to do just that, even though it’s not much fun dealing with evasive clients at the best of times!
Streamline your inventory
Take stock of your inventory and work out which products are selling and which are not doing well at all. Get rid of all the stuff that isn’t making you much money (even if you have to sell at a discount) and stop buying more. Focus on stocking a slimline inventory of the stuff that makes you the most money and your cash flow will improve immediately.
Negotiate
Suppliers love to hold on to good customers for as long as possible, so if you have a good rep with your own suppliers, it may be possible for you to negotiate a better rate of the products you stock. It’s hard if you’re not super confident, but all you have to do is call them up, explain the problem and let them know you may have to move to a cheaper supplier, and chances are they’ll be dying to shave a little off the margins, which will help you tremendously.
Bulk buy with other businesses
Another way of lowering your stock overheads is to partner up with other companies who require similar products because, when you buy in larger quantities it tends to cost you less per item. Are there any local companies who would consider bubbling up with you? Have a look around and reach out to people because they may be more receptive than you think.
Cash flow problems are no fun, but they can be overcome and the ideas above will surely help you to do so.
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