Cash is the lifeblood of any business. Without it, you can’t maintain day to day operations, and you’ll struggle to create profit. A company must make sure it is liquid to pay regular expenses such as payroll, payment to suppliers and fees to outsourced work like bookkeeping.
Here are seven simple ways your business can take to ensure stable cash flows.
Invest in high-quality office equipment
If office equipment is of good quality, then it will break down less often and require fewer expenses for repair. Example of a good purchase would be a multi-functional printer. This means you won’t have to pay for several devices and it would save space in your office. You can expect these things to last longer and you don’t have to keep replacing them often.
Be careful with debt
Taking on unnecessary debt can create havoc on your cash flows. The interest payments can balloon if you are unable to pay the monthly dues consistently. Good debt is useful only if you have strong cash flows that can quickly pay it. So think a million times before calling up the bank or other financial providers for a loan.
Hire only when necessary
The only time to hire people in your business is they bring in more money compared to their salary. While getting more help is right, a considerable payroll will quickly drain your cash flow. You can consider outsourcing some work to freelancers on a project basis depending on the demand for your product or service so that you can save on costs.
Control your inventory
Do not maintain such a high inventory as there are storage costs related to it. Also, an old stock can make you lose money because you might not be able to sell it all full prices anymore. This is especially true for products that can get outdated quickly.
Invest in an inventory management software so that you can determine the optimum level of inventory necessary for your business.
Give late payment fees
Part of proper cash flow management is making sure you get paid on time by your customers. If you’re not strict with them, your cash flows will weaken as they will keep delaying payments. As such, impose late payment fees so that it is painful on their pockets if they delay their payments.
Allow easy payment options
This means providing multiple avenues for your customers to pay. This could be online payment facilities like Paypal or partner with payment facilities like convenience stores. The idea is that by making it easy for your customers to pay, they will make payments on time and even earlier than the due date because it is easy to do so.
Always be marketing because new customers mean new inflows of cash. A strong base of customers will stabilize your cash flows and allow you to scale your business more to generate more growth and money.
In this highly competitive business landscape, cash is indeed king. Businesses with strong cash flows can stay longer in the game and compete more efficiently. Those with weak cash management strategies will wither and will have no choice but to close shop.