Cash flow efficiency is vital for any successful business, but when times are tough, its importance can easily be forgotten and overlooked by business owners. However, having high-profit margins is much less important than having quick and easy access to cash when you need it in the long run; maintaining good cash flow should not be neglected as without it you will very likely run into some very real problem sooner or later. Shockingly, a recent study found that 82% of businesses suffer from poor cash flow, meaning that insolvency could be just around the corner. Moreover, it often is not at all difficult to improve; there are a number of simple measures you can take to maximise it, helping to ensure both your business’ stability and development over the years.
Get a loan
A quick solution to your cash flow problems is to get yourself a loan. SME loans offer its customers both unsecured business loans and merchant cash advances, each with their own fantastic benefits. With a merchant cash advance, the repayment process is extremely flexible: there is no fixed repayment period, and payments are made in accordance with your monthly revenue and exclude your cash revenue. So if, for example, your profit is less one month than usual, your repayment for that month will consequently be reduced, and because the repayments are based only on your card sales revenue, you keep hold of all cash profit, which is highly beneficial for any small business owner.
Furthermore, the application process is quick and simple, can be done entirely online, and is easy to qualify for. Once your application has been approved, you will see the funding in your account within as little as 24 hours. This is also true of an unsecured business loan. For both types of loan, funding is quick, easy to apply for and easy to qualify for, which can be a real lifesaver for any business owner looking to quickly improve their cash flow efficiency. Furthermore, with an unsecured business loan, the repayments will be personally tailored to you over a 1-3 year period, and absolutely no collateral is required of you. It is a brilliant funding option, and certainly one to consider if your business is in need of extra funding.
Send invoices out as soon as possible
In order to maximise your cash flow efficiency, it is vital to ensure that payments for your products and services are coming in promptly. This simply can not happen if you are not sending your invoices out as soon as you can. If customers are slow or late to make payments to you, follow them up with a quick and polite reminder, and consider the advantages of offering incentives, such as discounts, to customers who pay you extra speedily.
Maintain a good relationship with suppliers and customers
Keeping up a friendly relationship with both your suppliers and your customers is essential to maintaining good and steady trade and revenue, and thus efficient cash flow. Be sure to pay your suppliers on time and behave professionally towards them, as such they will be much more likely to accommodate any of your needs; be it a last minute order or even possibly a renegotiation of prices to your benefit. Going the extra mile for customers when you can, and handling any complaints attentively and with respect, will help to maintain their loyalty, and thus your revenue.
Consider discounting products that are not selling
If some products are simply just not selling, consider reducing the price to encourage sales. Whilst you won’t make as much profit as you were hoping to, at least the value will now be released from the stock. Regularly running sales reports is a sensible way to keep an eye on what is worth stocking and what is not: if you don’t make the effort to run these reports regularly, you risk over buying on products that are not currently popular and fast selling, and thus not only losing out on profit but reducing your cash flow also.
Cut back on any unnecessary spending
Try to regularly review your spending and decide on whether or not there are any areas where you might be able to reduce your expenditure. For example, if your rent is expensive, could you relocate your business to somewhere else that is more affordable? Could you swap to a cheaper supplier without compromising on quality, or reduce your printing costs by storing paperwork electronically, rather than in a physical file? Whilst some cuts may seem too small to make any real difference, over time all these cutbacks will add up and help to improve your cash flow.
Without efficient cash flow your business won’t run, your employees become cranky and suppliers stop shipping you, and believe it or not you can run out of cash while your business is very profitable. Efficient cash flow is the heart of any smoothly run business; be sure to make it your priority as a business owner, to ensure that your company is as successful as it possibly can be in this highly competitive modern age.