How To Bolster Your Cash Flow
Cash flow moves through a business the way blood does through the body and it’s just as important. When the cash stops flowing, the business could fail. That is why you need multiple plans and solutions to handle any reduction of this flow. Here are ### tips for maintaining and growing the flow of cash through your business.
Sell Excess or Outdated Equipment
Any equipment you aren’t using and never will use is potential cash collecting dust. One quick boost comes from the initial sale but you also save money because you don’t need to store or repair these items.
Evaluate the Costs of Repairing vs. Replacing Current Equipment
Equipment you do use and keep can wear out over time. Sometimes, the cost of a replacement part outweighs replacing the item as in the case of old machines where parts are hard to find. Consider how long each part lasts, how often maintenance is performed and determine if you save money with a replacement instead.
Create a Subscription Service
Any time you can create a steady source of income, your cash flow improves. With a subscription, customers pay a steady amount each month or year. While sometimes subscriptions are canceled, over time you can build a picture of what percentage of your subscriptions are reliable sources of income.
Require Deposits for Large Orders
Part of bolstering your cash flow is ensuring money keeps coming in. The biggest issue for cash flow is customers who cancel orders or don’t pay in full. When you take a large order there is risk involved. By requiring a deposit you cover some of the cost of doing business.
Offer Discounts for Upfront Payments
Another way to reduce the risk of taking new orders is to offer a discount for customers who pay in advance. This rewards your customer for paying early and rewards you with a paid-in-full invoice.
Try Factoring for Unpaid Invoices
With factoring, you sell your unpaid invoices and trade away the risk that a customer might never pay for an upfront portion of the invoice’s worth. While this improves the flow of cash into your business, it also saves you the time of tracking down delinquent customers.
Improving cash flow takes thought and a willingness to branch out in your invoice practices. By selling off old equipment and optimizing the costs of maintaining your current equipment, you can also save time and money. With deposits, discounts and factoring, you can reduce your risk and improve the rate of incoming cash.