Cash flow is the lifeblood of any business. You can have the best business idea in the world, but if you can’t pay your employees and vendors on time, your entire operation will be in jeopardy. In order to ensure that your business has enough money to operate smoothly and grow profitably, it’s important to manage cash flow properly and avoid common mistakes that can lead to a lack of funds. Here are some simple steps you can take to boost how much you have coming into your business.
Improve Your Invoicing Time
Invoicing is one of the most important aspects of running your business. It’s how you stay on top of your cash flow, but it can be time-consuming and tedious. Be more strategic with your billing. Schedule invoices at specific times so that you’re not wasting time when you should be focusing on other tasks in the business. Automate as much as possible. Consider automating certain parts of your invoice process to ensure invoices go out when needed without you doing it manually. Always check for mistakes before submitting an invoice or sending it off to a client.
Raise Your Rates
If you’re feeling the pinch of slow cash flow, then consider raising your rates. This is a simple but effective solution that many business owners neglect to use. When you increase your rates, you make more money per job and you make more money over time by attracting better clients who will pay more and hire your services again in the future. Raising rates can be scary, but you can do it in a way that doesn’t cause you to lose current customers and can attract better customers in the future.
Accept Payments Electronically
If you don’t already, the convenience of accepting electronic payments is worth its weight in gold. While checks have their place, they’re not always the most efficient way to receive payment, and they can mean delays in getting payment. Accepting money electronically makes sense. While all companies charge a fee for this service, if you build these extra costs into your rates, you can still turn a good profit from your work. You can accept ACH payments which is different from accepting credit cards. ACH is a network that transfers funds electronically between participating depository financial institutions and other participating entities such as government agencies, corporations and individuals. There are also electronic check options.
Diversify Your Business
Setting a strict budget is the first step to improving cash flow, but there is also the aspect of diversification. Certain businesses like flipping houses, for instance, can make it more complicated to stay on budget, because there are so many variables. This is why some real estate investors may look into wholesaling houses for example, as well. This option may improve cash flow into a real estate business because there are fewer expenses than with a flipping business. While flipping is fun and rewarding, it’s also time-consuming and challenging. Businesses that want to diversify can look into wholesaling real estate for beginners and other opportunities to make money with a lower financial input when they want more cash.
Reduce Your Expenses
Reducing expenses will mean you need to look at your processes and find ways to streamline and lower costs. Look at things like technology spending, advertising, subscriptions, supplies, and more. Finding new vendors, removing things that are no longer essential from your budget, and improving efficiencies can all work together to improve your cash flow.
Consider Financing
If you need money for your business, financing can be a viable option. It’s especially helpful to help your business grow, to buy equipment for your business, to expand your business so it’s more profitable and more efficient, and to hire additional employees. Financing may not be a good option if you haven’t already done a good job of budgeting, if you’re always in the red, and if your business has been on the decline for a long time.
Conclusion
Improving your cash flow is a matter of paying attention to the details and managing your finances better. It can also come as a result of diversifying your business endeavors like with real estate. Better cash flow provides a buffer for emergencies and the ebbs and flows that come with business activities.
