If more money is going out of your business than coming in, then you have a negative cash flow. Sometimes this is because of external factors outside of your control, or it might be because of a sales trend or change in your operational costs.
Whatever the reason, you might be able to make adjustments to your business to help bring more money in.
Encourage clients to pay early
Here are some tactics to get your clients to pay you more promptly if you frequently have to wait for them to do so:
- Send out an immediate invoice and deliver products as soon as they are prepared.
- Provide a range of payment choices to your clients, including credit card and direct deposit.
- If you can, offer consumers incentives like discounts for making advance payments.
- For large or special orders, ask for a deposit.
- Follow up on outstanding bills and debts on a regular basis.
- Have processes in place that allow you to quickly resolve customer disputes.
Forecast and Plan for Future Cash Needs
Maintaining timely, accurate, and relevant accounting records enables you to create a forecast for your company based on past performance. Businesses should at the very least assess their cash flow on a monthly basis.
Being proactive with your cash flow allows you to foresee the money you expect to have and aids in planning for historically difficult times or seasonal trends.
Organize your staff and cash flow.
These changes to your staffing arrangements can save money on misplaced wages:
- Have flexible staffing arrangements and organize the staff for peak periods.
- Delay paying the sales commission until you have received the customer’s payment.
- Reward employees for actions that increase cash flow, such as achieving sales goals and cutting costs.
Outsource some business operations
For every business function, full-time staff are not always required. You should assess your company’s requirements and pinpoint any areas where outsourcing can be more cost-effective. Functions like auditing, tax filing, marketing, bookkeeping, payroll, and human resources can all be outsourced.
Manage your supplies and stock
Paying suppliers for product you aren’t moving is something you don’t want to do. Try to strike a balance between your client revenue and your stock-related costs:
- Replace slow-moving and outmoded stock with stock that has a faster turnover.
- Track stock levels and have processes in place to identify when you need to order new stock.
- Find suppliers who will only deliver stock to you as needed. With a “just in time” ordering system, you can avoid paying for inventory that is simply sitting in storage.
- If your terms of trade allow you extra time to pay once goods are delivered, make full use of this time. It is equivalent to a loan with no interest.
Renegotiate Existing Service Contracts
Another tip to increase business cash flow is to review service plans and contracts regularly. Start by looking at your internet, phone bills, copiers, software support, and janitorial/building maintenance contracts to pinpoint opportunities to save.
Improved technologies and increased market competition have driven prices down on many services, so it’s worth taking the time to shop around for a better deal.
Forecast your cash flow
Monitor your sales trends and upcoming expenses, and prepare regular cash flow forecasts to identify potential cash flow shortages in the near future.
How Ali Al Dohh & Co. Public Accountants Can Help Your Company
By implementing these strategies when managing cash flow, you will quickly get the upper hand on your company’s finances and learn how to increase cash flow within your business — so you will soon reap the benefits.
At Ali Al Dohh & Co. Public Accountants, we have a team of expert accounting and financial professionals; all dedicated to providing the best level of service at a price that makes sense for your business.
For additional assistance with cash flow management, developing detailed financial projections, auditing or taxes, contact Ali Al Dohh & Co. Public Accountants today for a free consultation.
