Like many small business owners, you probably wonder how you can consistently improve cash flow and still have the ability to purchase items the company needs. While borrowing money for business funding is always an option, learning better ways to manage cash flow will prevent having to spend even more money on repaying loans with interest. We highlight some tips below.
Make It a Priority to Collect Overdue Accounts Payable Invoices
You still expect on-time payment when you extend credit to customers to win their business. Unfortunately, timely payment does not occur as often as it should. This is when you need to take a firmer approach with collections even if it makes you uncomfortable. You might also consider reworking your current invoice template to make it easier for customers to make payments. Clearly listing everything the customer owes money for and providing multiple ways to pay can increase the speed in which your accounts receivable invoices settle.
Make a Cash Flow Forecast
A cash flow forecast is a document that provides an estimate of how much money you expect to come into your business over the next few months. It is also useful for estimating expenses and the profits you can expect after paying them. Another benefit of creating a forecast is that it allows you to see typical business cycles that enable you to predict revenue and expenses for up to one year at a time.
Market Your Products and Services Aggressively
You need customers to buy your product or service, but they can’t do that if they don’t know it exists. If negative or inconsistent cash flow is an ongoing problem, consider budgeting more for marketing. You need to make a firm commitment to one or more marketing campaigns and track results to determine which approach provides you with the best return on investment.
This year has been challenging for nearly all business owners when it comes to cash flow management. First Source Capital can help. Please contact us today to request an appointment.