Maintaining a positive cash flow is a challenging part of any business but one that can be easily achieved with the appropriate structures and payment systems. Here are some easy and quick ways to improve your company cash flow this year.
INVOICING AND IMPROVED CASH FLOW
1. Send out invoices early
Companies need to invoice to receive payment. Unfortunately invoicing does not equal payment and cash flow issues often arise from delayed payments, absent payments and difficulties invoicing.
To avoid this as much as possible, be consistent in invoicing and set out clear terms of payment. Invoicing at the same time of the month each month helps for planning, financial forecasting and tracking overdue payments.
If your invoicing process is manual, switch to an automated system. Splink is a simple payment tool that allows you to send payment requests easily. Your splink dashboard will also present a quick view overview of the status of all payments, their due dates and whether the invoice has been viewed.
2. Provide customers with different payment options
Providing your customers with multiple payment methods will decrease complication when it comes to receiving payment. Ensure you offer card payment and online transfer so your clients can default to their preferred payment method easily.
With splink, you can accept any time of payment at any time. Our frictionless payment system doesn’t require account creation or login so your clients and customers can pay immediately without hassle. It’s so effective that 92% of splink users receive payment within 7 days of sending a payment request.
3. Track payments and send reminders
Chasing payments is uncomfortable and not an efficient use of your time as a business owner or financial controller. Put consistent prompts and gentle reminders are beneficial as it simply becomes less difficult to ignore outstanding debts ultimately improving cash flow.
Luckily this process can be easily automated, reducing the time you need to spend sending emails and finding the words to politely demand payment.
Splink will send automatic gentle prompts when a payment is overdue, reminding your customers to access the payment link and make payment.
4. Consider incentivising early payments
If you’re a B2B service chances are your clients are just like you, looking to manage their cash flow and avail of ways to save money. If you’ve built a good reputation with your clients or customers consider offering a small discount on early payments. This will improve immediate cash flow and build positive loyalty with your customers.
Again, this is something that can be automated with splink. Simply create a payment link for the agreed amount and set a limit on when the payment terms expire.
5. Take deposits and establish a payment plan
If the work that is commissioned it due to occur over several weeks or months, or is divided into different stages, ensure you request deposits from your customers and receive payment when key milestones are met. This will improve your month to month cash flow and generally improve the consistency of your monthly operations. In terms of workflow, it can also be hugely beneficial as it helps you maintain a healthy flow of income as projects continue.
With splink, you can create payment plans to facilitate a better cash flow throughout the project timeline.
6. Introduce late payment fines
Late payments or absent payments can be devastating to a business and increase stress month on month. Avoid incurring late payments by introducing a late payment fine and ensuring that it is clearly laid out in the terms of service and payment conditions.
SYSTEM CHECKS AND IMPROVED CASH FLOW
1. Focus on high value, highly purchased goods and services
Take an honest stock take and inventory check to examine what products and services drive success for your business.
If you have a bulk of stock that does not sell well, consider selling it at bulk and reducing the amount offered in future.
For small services performed regularly, consider automating these processes and reduce the man-hours where possible.
Ensure your marketing, website and sales conversations move customers towards high-value items. Developing a strong upsell narrative will help here.
2. Review agreements with vendors
Periodically review terms with your vendors and suppliers to make sure agreements are still competitive in the current market. Similarly, regularly negotiate with suppliers and vendors to ensure your goods are the highest possible quality at a favourable rate. Like before, suggest favourable payment terms by asking for reductions if payments can be made earlier.
3. Renegotiate credit options
At points when interest rates are low and borrowing terms are favourable, consider accessing credit to ensure your operating costs are covered. This security will help in emergencies and also enable you as the business owner to think about the bigger picture rather than becoming too focused on the day to day running or worrying about monthly cash flow issues.
4. Examine running costs and everyday expenses
Establish all your day to day costs like rent, subscriptions, services, vendors as well as staff costs. Working through each, consider any alternative options and ask whether each system is completely necessary.
People cutting or reducing salaries consider the benefits offered to customers like coffees, lunches and travel expenses. Reduce these where possible, and reserve travel for necessary meetings and project work.
5. Lease don’t buy
If cash flow is an issue, consider leasing equipment rather than buying. The downside is that you do not possess the equipment as a company asset but the benefit is that a small monthly payment can improve overall cash flow temporarily and place the business in a better position for growth.
SALES AND MARKETING TIPS TO IMPROVE CASH FLOW
1. Develop recurring revenue or subscription models
Examine any patterns in customer behaviour and consider offering a subscription model for customers. This helps again with financial projections as well as building customer loyalty. A guaranteed or predictable source of revenue will make the business overall more attractive and more appealing to potential investors and credit applications.
The subscription model is something that can be easily developed and replicated throughout your business.
With splink you can set up recurring payments and monitor their status from your dashboard.
2. Re-consider your pricing
Reconsidering and re-evaluating your pricing seems daunting but it can be hugely beneficial to your business and monthly cash flow. There are many methods to successfully raising your prices without losing customers.
Check out our blog on pricing and strategy to see more.
3. Utilise your marketing and retargeting customers
There’s one adage that’s very true in business; you need to spend money to make money.
Spending on advertising when you’re low on cash may seem like a risky move but with the right considerations and planning your advertising will result in a huge return of investment.
One quick way to get started is to retarget the customers that have already bought from you. Simply put, this involves installing a small piece of code on your website that will enable you to reach the people who have visited your site previously on Facebook, Instagram and the associated Facebook advertising network.
You can upsell these customers with new goods and services or retarget them with similar products.
4. Lean on your previous customers
Happy customers are your best friend and will help you to reach and engage new ones. A strong referral programme that is mutually beneficial for existing customers and new customers will help with this.
To find out about our referral programme read more here.
5. Expand sales markets
Expanding into new markets can be easily achieved by understanding the routes to entry, likely customer behaviours and considering the additional costs.
Using data available to you and understanding customer behaviour could massively help in entering new markets. A simple test is to run some low-cost advertising in these new markets and create a duplicate sales page on your website in the relevant currency with additional charges to cover any added postage or service costs.
Operating in this manner will allow you to test the market before committing to hiring additional staff or locating suppliers in new countries. Use the information available to you to test your most successful and sought after products and services.
6. Be flexible with new services and products
Is there a high-frequency automated service you can offer customers? Consider developing a low-risk product that will entice new customers or appeal to existing ones.
7. Work with what you have
Are there elements of your business that you could be utilising better? If cash flow is an issue perhaps consider renting space in your office to a freelancer or liquidating old stock.