Tips to Maintaining a Positive Cashflow – When running a small business, cashflow is paramount to your success. You need to ensure that you are maintaining a positive cashflow as much as possible. Although it can seem like a difficult task, there are simple steps that you can take to ensure that you keep the money coming in. Let’s take a look at some of them.
Use Personal Money
As the old saying goes, you need to spend money to make money. However, if the company finances are in a precarious position, you may not want to add to the expenses and risk negative cashflow. If you find yourself in such a predicament, you could consider diverting some of your personal finances into the business. Taking just 10% out of your own paycheck could give the company’s cashflow a well-needed boost. If you still require more cash, there are other options available to you. If you took out a student loan for college, you could consider refinancing your student loan to free up some of your own money. Or maybe there’s a grant available that you might be able to get from the government? These are all options to consider.
A tried and tested way of increasing cashflow is to raise prices. If you are afraid of losing existing customers, you could test the waters by raising prices for a small amount of your services/products. You could also raise prices for new customers only, which will keep your old clients happy. Furthermore, if you incorporate a loyalty discount, it will keep people returning to your business.
Make Use of Promotions
If you are against raising prices altogether, you could consider the alternative of using promotions to attract new clients. If you offer a discount for a limited amount of time, you could attract twice the number of new customers that you normally would during that period. Even though your prices will be reduced, the influx of new clients could more than make up for it.
A great way to increase positive cashflow is to reduce your overall expenses. Take a look at your company spending and try to be as economical as possible. See if there are any unnecessary expenses that can be cut and you will be surprised at how much you can save. There are some essential tools every company needs so don’t be afraid to shop around as there may other vendors that can offer you better deals on stock or services for your company. You should also try to negotiate prices with your current vendors and you may be able to get discounts if you purchase goods in higher quantities.
Implement Late Fees
When dealing with clients and invoices, you will be waiting on payments to trickle in, which can actually negatively impact your cashflow. Consider implementing late fees to make up for the lost revenue. Late fees can also encourage those who owe money to resolve their accounts with you sooner, which will boost the productivity of your company. If you do implement late fees you need to be on top of things. Be upfront about the new late fees; we would recommend including fees on invoices that are more than 30 days late.
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