Following are several tips you can implement to help keep a firm grip on your business’s cash.
Inflows & Outflows – The Cash-flow
Track the incoming cash, cash on-hand, and accounts receivable. Reduce these by accounts payable, recurring expenses, and known upcoming outlays. The excess indicates a positive cash flow.
Watch your monthly spending
- Reviewing all contracts on a recurring basis
- Credit check all Clients to access their financial status
- Cut insurance costs. Review all insurance policies and options annually
- Compare your Bank vs. others. Fees charged, lending policies, ease of contact and responsiveness
- Pay off interest bearing debt asap, especially credit card debt.
At least weekly review all of the business’s receivables. Be prompt in remitting invoices, and if you give terms make sure the Client is contacted if they pass terms.
Boost Cash Inflows (carefully)
- Raise prices. Be thoughtful and make sure you have the Brand equity to charge a higher price than your competition.
- down-payments on large orders
- Open an interest-bearing checking account
- Make sure your business credit card is a cash-back one. And redeem the credits in cash.
Charge Fees on Late Payments
Clients that pay late should be charged a fee. Provide a grace period of say 5-10 days but after that access a late fee based upon a percentage, previously communicated in your terms and payment policy.
Obtain a Line-of-Credit
Apply for a line-of-credit from your Bank. The line can be for a small amount and accessible if and when required. The fee for a line-of-credit is small and the interest on the funds doesn’t kick-in until you draw on the line.
Making sure you have enough cash to run your business, for current bills and commitments is good management. Cutting back on unnecessary expenses, tracking cash and receivables, and researching ways to improve funding are all actions that should be done on a recurring basis.