5 Helpful Tips for Businesses to Improve Their Cash Flow
Having a strong cash flow is one of the most important things for a small company. In fact, the amount of cash on hand can be the deciding factor in a customer's choice to buy from your company or a competitor.
By making a few simple changes to your spending habits, you can quickly increase the amount of cash you have on hand each month. Here are five ways to grow your monthly cash flow:
1) Encourage Payment Upfront
Don't wait until the end of the month to find out how much cash you have left over. Have your customers pay upfront.
This helps you to avoid issues like those who pay you 30 days after the work is completed, also known as receivables.. By then, the job is completely forgotten and your client has forgotten their promise to pay you.
2) Think about Working in a Virtual Office
Many small companies are now operating from their homes, coffee shops, or shared office space. While this is a great way to avoid overhead costs, the main problem that small companies face is that the business isn't operating full time.
You might think that you can just run the business from home when you get the urge to work, but that doesn't always work out as planned. If you want to save money on costly office space but still want to run your business full time, then consider working from a virtual office.
3) Consider Refurbished Equipment
Small businesses often need new equipment to grow, but new equipment often comes with a large price tag. If expanding to hire new employees is too much for your cash flow, then consider refurbished equipment instead.
Refurbished equipment can be as good as new at a much lower cost. You can also use it to help increase your cash flow.
This is especially helpful if you are just starting out and don't have a lot of cash to spend.
Make it a habit to always look at used equipment before buying new.
4) Utilize Third-Party IT and Finance Services
Many small businesses face the problem of having a limited budget to pay for employees. The best way to get the most out of your employees is to outsource services that you don't need to do yourself.
By outsourcing tech support, accounting, and payroll services, you can avoid hiring another IT or finance person. This will allow you to focus your limited resources on growing your business.
You can easily find a third-party service on the Internet that will be more than happy to help you with payroll and accounting services.
5) Think about Leasing
If you can't afford to buy new equipment, then consider leasing it instead. Leasing is a way for small companies to sign a contract to get the equipment they need. You can also lease office space, vehicles, and other equipment.
Be careful with leasing, though. It is easy to get into a situation where the monthly lease payments are more than your business can afford. Always make sure that you can afford the lease before you sign it.
You can make a lot of changes to grow your cash flow, but some changes will be much easier than others. You will want to think about your own situation to determine which changes you can easily make.
Work with professionals at Revonary Accountants & Advisors, LLC to improve your cash flow. We provide accounting services in Rye Brook to help businesses with their finances. Get in touch with us today to learn how.