Whether you are just starting out or you have been in business for a while, the importance of steady cash flow does not diminish. Just take into account the following, 82 percent of all businesses fail due to poor or negative cash flow management, so you better take this seriously and ensure that you start improving this aspect of during business as soon as possible. Luckily there are some great options to do just that. And if you are not sure where to start, continue reading, some of the tips listed in this article are bound to help your business.
Start by expanding payment options for customers
If you limit the payment options that you offer your customers, you are limiting your access to cash flow. And at the same time, you might even end up losing customers who are not compatible with the options you are offering. Do your research, and find out what are the preferred methods of payment for your target customer groups, and if you are not offering them, consider changing that.
For example, different generations prefer different payment methods. The generation Z is quite comfortable using mobile apps for payment, and so are the millennials. If you take into consideration that 90% of millennials own smartphones, and 50% have used their mobile device to make a purchase, earlier generations still prefer plastic, and cash is slowly disappearing. Now that you have the data you can easily adjust your payment options for customers so that they can more easily provide you with the much-needed cash flow.
Consider invoice finance
A lot of companies struggle when it comes to getting payments from their customers. And it is that waiting game that can significantly damage the regular cash flow. So it is important that you find a way to get at least part of that money at the time you need it. This is where invoice finance comes into play.
This type of finance uses invoices as a way for businesses to unlock cash tied up invoices and therefore speeding up cash flow. You can opt to improve cash flow with invoice finance thus getting the funds straight away, eliminating the waiting period, and keeping your company’s cash flow going. The fee that you will pay for this service is well worth it as it will enable your business to stay afloat even when your customers are late on their payments. This type of financing can ensure that you get the funds when they matter the most.
Create an accurate forecast
This is one of the ways you can get ahead of the issue. A cash flow forecast will enable you to have a clear idea when the payments should be coming in, and what might be the crisis period. That way you can plan your spending and set some finances aside for the no income periods so that you can keep your business running without having to get external financing. Your cash flow forecast should highlight the cycles in your business and it should also predict your cash flow on a monthly and yearly basis. It is never 100% accurate but it will help you navigate your finances so as to avoid risk situations.
At the same time it can help you re-organize your payments, you could shuffle them around a create a schedule that would account for the possible issues that the forecast has pointed out. You can use a forecast template to help you navigate the whole process. And in that way you won’t overlook any aspect so that you can get the best possible information before making any financial decisions.
These three tips can save you a lot of headache in the future. And at the same time, you can avoid taking out loans just to keep the money coming in. The right payment methods, along with options of getting advancements can significantly boost your cash flow. And if you can predict what might happen, and when the biggest issues might be then you could take the right steps so as to avoid any possible problems.