One of the biggest mistakes you can make as a small business owner is to neglect your cash flow. Although many other elements of your business will demand your daily attention, nothing is more important than the amount of money flowing into and out of your business. Without steady, consistent cash flow, you will find yourself scrambling to pay employees, cover utility bills, and mend relationships with vendors. Keep reading to learn how you can get a better handle on your cash flow, presented by Radeya Global.
Incorporate Your Business
If you’ve been putting it off, incorporating your business can be a great way to boost cash flow. As a corporation, you’ll enjoy lower tax rates, you can defer your taxes, you can also choose to pay your salary via dividends to help lower your tax burden. In addition to tax benefits and personal asset protection, incorporating adds another layer of legitimacy to your business, offering a more professional image. It will also be easier to attract investors to help raise capital, and a corporation has a continuous lifespan.
Anticipate Future Cash Needs
Being proactive is an essential component of any good cash flow management strategy. By keeping good financial records, you will be able to forecast your anticipated revenue and plan for periods when sales tend to be on the slower side. For example, if you’re approaching a seasonal slowdown, you can start looking for ways to drum up extra cash now. The same goes for anticipating large expenses. The ultimate goal here is to avoid major cash flow surprises so you always cash on hand when you need it.
If you need support interpreting your cash needs, software like Zoho Books can unlock financial insights through automated reporting. By viewing cash flow trends, filtering through reporting time periods, and separating cash flow categories, you can gain valuable insights into your business’s finances.
Land Repeat Business
Encouraging repeat business is one of the best things you can do to secure a steady cash flow. When customers return to buy your products or use your services again and again, they become increasingly valuable to your company. Plus, it’s much cheaper to encourage customers to return than it is to land brand new ones! Establish customer loyalty programs and offer subscription plans to land repeat business. You could also try collecting email addresses from your customers and sending out regular email campaigns to keep them coming back.
Prioritize Your Accounts Receivable
Another way to boost your cash flow is to make sure you get paid on time. Staying on top of your outstanding invoices will ensure that you don’t let those late-paying clients fall through the cracks. Encourage your customers to pay your invoices quickly by offering a slight discount for paying within a certain timeframe. Offering a wide selection of effortless payment options will also help you get paid faster. For example, consider accepting credit cards or investing in an invoicing service that enables one-click payments for clients. This may create a new business expense, but the cost is worth it to get your money in faster!
Cut Business Costs
If you need to improve your cash flow, cutting unnecessary business costs should be your top priority. There are several ways to cut costs without laying off your employees or hurting the growth of your business. For example, if you lease office space, consider sub-leasing some of your unused space to another company. You could even sub-lease a portion of your warehouse. Take some time to review your business spending and look for other opportunities to offset your costs and promote positive cash flow.
Cash flow is the very heart of your business. As long as there is more cash flowing into your business than out of it, your business will thrive and grow. But when you start dipping into the red, things can go downhill fast. Stay on top of your cash flow so you can give your business the best shot at success!
WRITTEN BY KATIE CONROY
ABOUT THE CONTRIBUTOR:
Katie Conroy is the creator of AdviceMine.com. She enjoys writing about lifestyle topics and created AdviceMine to share advice she has learned through experience, education, and research. She can be reached at firstname.lastname@example.org or via her website.
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