Cash flow is like the lifeline of any business irrespective of its niche. It quite doesn’t matter whether you are running a huge enterprise or you have small eat out at the corner of the street, if your payment is stuck with some customers then you are definitely at a standstill since you are unable to pay to your suppliers. Hence, your next batch is at a waiting list and this is how the cycle proceeds.
Below are some tips which can help you take back the reins of your business and let the ball roll consistently.
Offer discounts to the early birds
Devise a method through which you are able to offer discounts to all those who pay you on time or even early. If your payment due date is the last day of any month, offer discount when people are pay you with a week or even in advance for the upcoming month. Discounts are pretty easy to put in to action and you may as well enforce a penalty in order to pull the strings of people who are giving you trouble.
Manage your payments
When it comes to making your payments, not just for your suppliers but for your lenders as well – bankers, loans for small business providers, and other creditors – take the full time without going overboard the due date. If a supplier has given you the allowance for a month then take the full amount of time. On the other side, if your supplier adopts the same policy of giving discounts then you need to weigh your options as to whether you would rather take the discount or keep the money safe in your account. Also, maintain a good relationship with your old suppliers for you need to sustain the good relationship for future purposes as well.
Indulge in small investment plans
Invest in some short term plans or in accounts that offer you high interest. Usually, there is no measure and reason as to why should you keep your money standing in any business, but when any need arises from your end then see to it that you are able to get it.
A cash flow prediction towards the utilisation of your business cash finance should be part of your business strategy and you should put it to good use as tool for business. You should have some idea as to when the money is predicted from what sources and when are you required to make your payments. One thing that should be kept in mind here is that this technique is different from budgeting plans and it is upgraded very frequently as per your expectations. This would also keep you well prepared for any unexpected cash flaws and pitfalls in near future.
Role of invoices
Your invoices should be ever ready. This should be one task that should never be compromised because the later you will bill your customers; there is likely chance that they would delay it even further. Also, once this has been sent maintain a regular follow up as to who is mindful of it and who is not. A phone call after the regular mail should make the reminders and never hesitate to take strong measures if the irregularity persists and your customers continue to ignore it.