Most likely you are in business to make money. If you want to expand operations, use innovative technology or recruit superstar employees, you’ll need to maintain healthy cash flow. This is easier said than done, since businesses of all sizes have considerable monthly and ongoing expenses. That’s why you may want to check out these six tips for efficiently managing your business’ cash flow.
#1 – Clean Up Financial Clutter
Successful business owners have a clear picture of their financials. They often rely on thorough accounting, knowing their inventory inside and out, and use software applications to track both revenue and spending. Keeping your ledgers precise and uncluttered will help you accurately monitor your operations. You can even work with a certified accountant or hire an experienced CFO to help manage your money. This is sure to pay off in the long run.
#2 – Schedule Your Bill Payments
Many small business owners get so busy with employee issues or customer acquisition that they simply don’t monitor their cash flow as precisely as they should. Don’t be that business owner. It’s best to know how much revenue will be coming into the business and when it’s scheduled to arrive. Even if you don’t like the numbers, you’ll also need to know your outgoing expenses and when they need to be paid, including payroll, utility bills, rent, and all other debts.
Manage your cash flow strategically to make sure your business doesn’t come up short on funds during crucial moments. You want to avoid postponing marketing campaigns or ordering supplies because the business account is empty.
#3 – Invest in Innovation
It may seem wasteful to spend money on research and development but it can save or even make you money in the long run. First, you’ll want to leave some funds in your monthly budget that can be used to update your processes, products and services. You might find that you need to revise your website, upgrade computer networks or offer a new or updated product.
Remember, innovation can maximize your revenue and will always help your company stay one step ahead of the competition.
#4 – Optimise Payroll
Payroll and benefits may be one of the largest financial costs for your business. Downsizing is an aggressive way to save money but will ultimately limit your productivity. You can figure out creative ways to lower payroll costs without your business losing out.
- You can outsource projects by contracting freelance employees to help on a per project basis. Talented remote workers are everywhere these days, and can be found on websites like UpWork. You can avoid paying ongoing salaries, payroll tax, workers benefits and more. Additionally, you can find the perfect contractor for each project.
- When it is clear that your business needs more staff, you can experiment with part-time or seasonal workers so you aren’t making a long-term financial commitment. This is also very helpful, as you may not yet know what type of employees suit your business best.
- Another option is to have your payroll service or accountant review current wage and employment laws for ways to save. Be sure to offer your employees other benefits wherever you can so as not to build resentment.
#5 – Offer Multiple Payment Methods for Customers
Whether you run an international business or a small local company, it’s important that your clients can pay for your product or service quickly and easily. There are so many new payment options these days that it is even challenging for seasoned owners to keep up.
Start with a variety of payment options and methods so your clients can choose whatever method they feel most comfortable with. You’re more likely to get paid on time when you do so. You won’t have to waste time and manpower chasing up accounts receivable.
#6 – Watch out for Hidden Charges
Small service charges, late payment fees and other charges can really add up over time. Why not avoid unnecessary charges wherever you can? With a bit of research you can minimize fees for banking, loans, credit cards, taxes, payroll services, office supplies, inventory, permits and more. One way to protect yourself against hidden costs is by comparing the cost of public liability insurance.
Let the Cash Flow
Cash flow management is a critical part of running a prosperous business. Even if you don’t have huge amounts of money to play with, by using sound cash flow practices, including our six tips, you can efficiently stay ahead of the competition, and ensure your long-term success.