5 Tips For Boosting Your Business’ Cash Flow  

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Profit margin may be the final goal, but without cash flow, profit margin is never going to show up. The fact is, there’s a strong relationship between those two popular business-world sayings: “It takes money to make money” and “Cash is king.”

Cash on hand is the air flow around the arrow as it surges towards the bullseye. Without it, no amount of precision in aiming and release from the bow is going to matter – the arrow will fall to the ground before it hits the target.

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Therefore, improving cash flow should be a top priority for all small business. Here are 5 tips that will assist you in doing that, so your business can grow and prosper:

1. Practice Good Invoicing

You have not because you ask not, or at least, because you don’t ask on time and in an effective way.

Using an attractive, easy to read, standard format on your invoices is key. Including all the necessary information and making things like due date, late fee amount, and acceptable methods of payment prominent will help as well.

It’s a proven fact: businesses that use well planned invoice templates, send out email due-date reminders, and utilize modern accounting and invoicing software, get paid faster boosting their cash flow.

2. Offer Cash Discounts

For some business types, it makes sense to offer customers a small discount if they opt to pay upfront, in full, and in cash.

Many times, getting cash immediately is well worth giving away a 5% discount since you don’t have to pay for credit card processing. Plus, it’s a policy that’s going to promote customer retention and satisfaction.

3. Offer a Store Card

Credit and debit cards may not be cash in hand immediately, but they will credit the cash to your account by next business day in most cases. You don’t have to worry about taking cash and paper checks to the bank for processing.

Offer a store card with a 5% discount on all purchases, and you’ll encourage people to use plastic in your store plus to visit your store more frequently. It’s a double-duty plus for improving cash flow. Also note that gift cards are good for cash flow as well since you get paid well before the items are even purchased with the gift card.

4. Offer Credit With Care

Don’t be too quick to offer free (or any) financing to your customers. Now, it depends on which type of business it is, but tying up or slowing down your cash flow with financing deals isn’t always good for your business.

If customers fail to pay, don’t pay on time, or come back wanting to cancel and return the item, you either lost out on cash flow or you have to fight with your customers to get them to make the payments (never a healthy proposition.)

That doesn’t mean you should never allow financing, but check the credit score and get references. Be sure it’s going to work out before saying yes.

5. Use Business Financing

Credit cards extend your cash flow by 21 days or more without charging you interest. You may even be able to earn cash back on a business credit card. It only makes sense to make credit card your usual method of paying for inventory and other business expenses.

For major purchases, like new equipment, you may be better off taking out a loan and making monthly payments than buying outright (even if you’re able to.) You might pay a little interest, but that’s better than having your cash flow strapped for a year or more and having that situation hurt your bottom line.

These are only five of numerous strategies to use in improving business cash flow. For example, subscriptions provide steady cash flow and an interest-bearing account boosts your cash. By continuing to find ways to increase cash flow, you free up the lifeblood of your business.

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