Cash Flow is all about the money flowing in and out of your business. For healthy financial operation, you need to ensure the cash coming in is bigger than the cash going out.
These are seven tips that can help you manage your cash flow operation.
1. Monitor your cash flow regularly.
Online accounting software such as QuickBooks Online makes it simple to reconcile your accounts, generate reports and more. Because your information is secure in the cloud, you can easily stay on top of your cash flow wherever you are.
2. Cut costs and cash in on assets
Focus on recurring monthly, quarterly or annual expenses. Can you cut back on utilities, rent or payroll? Are you spending money on subscriptions or services you’re not using or insurance you no longer need? Can you renegotiate the terms of outstanding loans or leases?
If you have equipment you no longer use or inventory that’s becoming obsolete? Consider selling it to generate quick cash. Be smart.
3. Lease equipment instead of buying it.
By leasing vehicles, computers and other business equipment, you get access to the latest features and avoid tying up cash—but you still get to expense the lease costs on your business taxes.
4. Stay on top of invoicing.
Send invoices when the work’s completed or products are delivered—why wait? Find out the specific person, job title and address to send your invoices to so they don’t get lost in a shuffle from department to department. Design your invoices so they’re straightforward and easy to read, with key areas like due date, amount due, where to send payment and payment methods highlighted. Speed things up further by emailing invoices instead of mailing them.
Don’t let travel slow your invoicing. If you’re on the road or on a trip physically away from your business, you can try the free instant invoice creators Invoice-o-matic and invoiceto.me. They’re so simple, you don’t even have to register—just input your info into a template, then generate a PDF you can email to your customer.
5. Get paid faster by using mobile payment solutions.
If you sell products or provide services at customers’ homes or offices, get paid on the spot with mobile apps that use your smartphone or tablet to accept payment by credit and debit card.
6. Speed payments by offering deals.
Consider offering your customers incentives, such as a percentage off the total, for early payments, first set of people to buy or subcribe to a service gets a discount or some kind of reward. However, make sure to do the math beforehand to ensure the tradeoff (getting paid early) is worth the loss (less money in the long run).
7. Ask for deposits or partial payments on large orders or long-term contracts.
For example, a website developer might charge a 10 percent deposit upfront before beginning to draw up plans for the project, then charge half the remaining amount when work begins, and the balance upon completion. Charging this way, the company generates enough cash to finance the materials and pay the workers needed for the job.
