Cash flows in, cash flows out, and the wheels of business keep turning and turning. Liquidity is not just a feeling of stability, it’s a real tangible freedom that gives you, the business owner or c-level exec, the freedom to make choices that you would otherwise have to turn down.
And it all starts with your strategies to improve cash flow.
Improving cash flow should always be on the cards, every quarter. And now that the end of the year approaches, we believe that you should be focusing on strategies to improve cash flow NOW.
No business runs smoothly but keeping your expenditures, profits, and revenue balanced can make the days feel a lot easier, that’s for sure. But aside from boosting sales, keeping track of your cash flow is another important aspect that you need to carefully think about and consider to keep your business sailing on smooth waters.
Having enough cash to pay for supplies, payroll, bills, or services is crucial for the business to survive, especially since COVID-19 came cheerfully into our lives. With a healthy cash flow, your business can have the leeway to hire more staff to efficiently run the business and you can also produce more and acquire additional supplies and equipment as needed.
Below are 5 strategies that you can implement in your business to improve cash flow in a post Pandemic world:
We know what you’re thinking, “oh, yeah we know this”. Well, anything worth knowing is worth repeating. We advise sticking to an invoice deadline every month no matter what. Which will give your clients a conscious reminder that the bill is due.
The faster you send invoices, the faster the cash will come in. Take advantage of invoicing software to eliminate the tedious task of manual invoicing. Reliable invoicing software can help you speed up your invoicing process for a healthier cash flow.
Also, invoicing software features an automated reminder so that your customers will pay on time. Besides, most invoicing and accounting software come with an app so you can also send invoices on the go.
Here’s the issue with this strategy after the pandemic. We are all struggling, and you don’t want to ruin a relationship with a client. So here are a few ways to make sure you can ask for invoice payment after the pandemic:
- Be Fair
It may make sense to send out a message to all your vendors, tell them that you will be updating invoice payment dates to be more flexible, or it may make sense to give only some of your clients that benefit, but all in all, you must make sure to be as fair as possible.
- Be Human
Remind the companies that you work with that you are also experiencing this hardship and that you are here to talk about challenges moving forward. We are all human, and we are all in this together. If you can approach each of these situations from an empathetic stance, it will only benefit you long term.
- Remain Flexible
Yes, you are looking for strategies to improve cash flow but you must also think long-term. Some companies are hurting now but they will bounce back by next year. Remain flexible and work with companies that may have no cash flow now, but will come into next year.
Consider updating the price of your services or products and evaluate if the rates properly compensate for the materials, time, and manpower you have invested to make them. Especially after the pandemic. It’s become more taxing and time consuming to do simple tasks these days. BUT, some activities have become easier. For example, business meetings are now much easier when conducting all over zoom.
So consider upping your price for certain services while lowering your price for others. This is one of the more difficult strategies to improve cash flow because you will have to decide if you want to grandfather existing clients into this price change or not.
You may also want to check how your competitors are charging. Lower prices may seem attractive, but at the end of the day, your business should make a profit. You must come up with a fair price enough to compensate for what you have put up to come up with the product.
Consider new ways and products that will add income to your business. Create a new marketing strategy like advertising your products or services online. Sign up for a social media business page where you can post rewards programs for loyal customers, discounts, or referral programs.
Since people nowadays spend several hours on social media, you can benefit from this free marketing strategy by customer engagement through likes, comments, and shares.
Managing cash flow is not just about the incoming cash, but also taking control of how much cash is going out of your account. Carefully examine your business expenses and analyze if these are necessary.
Like for example, you can cut back or eliminate overtime wages for an employee who is working outside of office hours just to work on invoicing. You can do it by using invoicing software instead so that the task will be streamlined. This is one of the easiest strategies to improve cash flow, and we highly recommend keeping this in mind as we move in 2021 and Q1.
Consider taking a short term cash loan that is paid back in installment for a while. While the idea of owing money is not that attractive, a cash loan allows you to borrow a certain amount with flexible payment terms which you can use to expand your business, cover unexpected expenses, purchase new equipment, or other ventures that can generate more revenue.
Whether you want to increase your income or decrease your expenses, managing the cash in and out of your business is crucial for a more successful business.