What’s the universal challenge every business faces at some point? Poor cash flow. Large, small or medium sized, they all experience periods of cash flow stress.
We have lots of ways we can assist our clients with their cash flow challenges so please get in touch if you would like some help. But here are our top 4 DIY cash flow tips to help you prevent and manage your business’ cash flow.
Tip 1: Use your buying power to negotiate better deals with suppliers
Your suppliers can be anyone – your energy provider, bank, stock or component supplier, courier company etc. Don’t underestimate your importance, even if your supplier is much larger than you. If they have a salesperson or account manager taking care of you, that person has a sales target to meet. As a result, they will be keen to hang onto your business and may be able to negotiate better prices or longer payment terms for your business. That could start to ease some of your cash flow strain.
Tip 2: Review your own customer payment terms
While there may be industry norms that have determined your business’ payment terms, there is no reason why you should maintain them if they are detrimental to your business cash flow. This is particularly true for slow paying customers.
Moving from 90 days to 60 days or 30 days to 14 days can make a huge difference to your cash flow. If your business has an overdraft, shorter customer payment terms will not only bring more money into your business, it will also reduce the amount of interest you pay on your overdraft. That’s what we call a double-whammy cash flow bonanza!
Tip 3: Review your stock levels
Do you have stock that has been sitting around for a while? Maybe it’s time to discount these slow moving items because they are unnecessarily tying up space, funds and, no doubt, worry.
Another aspect of reviewing stock levels is evaluating whether your covid supply chain issues are still a problem. If you haven’t done so already, evaluate whether you can move back to pre-pandemic stock levels for any items. Again, this could create a double-whammy cash flow bonanza because you have less business revenue tied up in stock and lower overdraft interest payments.
Tip 4: Invoice quickly
Don’t delay sending invoices because you are too busy or waiting until the end of the month. Invoicing is just as important as getting the sale because it’s bringing money into your business. So make sure work is promptly invoiced – whether it’s a deposit invoice or a final payment.
Cash flow strain will harm your business and cause you stress
Throughout the life cycle of your business, cash flow will be a recurring challenge but that’s where we can help. These 4 tips are provided to give you a start but for help to implement them or for informed and expert business support, visit our website or contact us here to make an appointment to discuss your business challenges.
