Improving your cash flow is critical to your overall success.
Your business needs money to survive, so paying attention to techniques you can employ to improve cash flow is critical to your overall success.
These small changes can make a real difference to the cash flow and bottom line of your business.
Improving your cash flow
One of the biggest challenges during the first few years of a business is achieving and maintaining positive cash flow. Cash is the lifeblood of your company.
Without it, your business won’t have the funds to pay suppliers, employees, or fund marketing initiatives.
1. Speed up receivables
If you sell products or services on invoice, it’s in your best interest to get paid quickly.
Give your customers an incentive to pay sooner than 30 days, which is the typical payment period.
Try to collect payment quickly by making it attractive for customers by offering a small discount (1% or 2%) deducted from the amount due if they pay within 10 days of the invoice date.
And when the cheque arrives, be sure to deposit it on the day you receive it.
2. Make invoicing a top priority
Same-day or next-day invoicing is the best practice. Set aside time every business day for billing.
Consider emailing invoices as a supplement to regular mail. Chase up habitually late-paying customers on a regular basis to ask them for payment.
3. Open a merchant payment account
Receive payment quickly by letting customers pay by credit or debit card. This allows you to receive next-day value for your sales and services, without the need to handle checks and make deposits.
Explore a merchant account with Chase Merchant Services.
4. Use your business credit card
Consider using your business credit card to pay suppliers and make purchases.
Learn about your card’s grace period, and take advantage of it. You may have up to 25 days after receiving your statement to make the payment without incurring interest charges.
Some cards also come with cash-back features.
5. Put your cash to use
If you buy products on a just-in-time basis and find yourself with extra cash, put it to use by investing in a short-term instrument, such as a high-interest savings account for business, or paying down your line of credit.
A high-interest savings account for business allows you to earn a competitive rate of interest on your cash on hand while ensuring the funds are accessible whenever you need them.
6. Invest in technology
The latest accounting software or invoice management services should help you to keep on top of receivables and speed up customer payments.
Often a small investment in technology can help you to reap tremendous cash flow advantages.
Before you take action on any of the information above, we recommend consulting with a qualified business advisor that understands your unique needs and situation for your specific business and/or personal plans.