Ready to whip your small business into shape this year? It doesn’t matter what kind of industry you’re in, there’s always a way to maximize the company’s cash flow to make daily operations run more smoothly. Here are four tips to consider implementing within your company to help your bottom line.
Organize Your Invoicing Process
The way you manage your invoices depends on the type of small business. If you provide a service, give your customers a short-term due date to pay their invoicing or, even better, make a payment due upon receipt. Another option is to consider a factoring service. This is basically a short-term loan through a company that prepays your invoices and then collects from your customers on your behalf—for a fee, of course. If lack of invoice payment is hurting your cash flow, this type of service may be worth the cost.
Treat Your Working Capital Like Personal Savings
Don’t forget to take advantage of interest-bearing accounts for your business. Shop around for banks to manage your cash flow, especially since savings rates are finally beginning to be more competitive. Depending on how much cash flow your company manages, you could potentially start earning a fair amount. Alternatively, look for deals from banks and credit unions that offer signup bonuses, when you open a business account with them. It could be worth transferring your funds, especially if you’re in the early stages of your business when every dollar counts.
Conduct Regular Efficiency Reviews
No matter what kind of small business you run, it’s important to review each facet to optimize efficiencies at least once a quarter. If you sell products, conduct inventory checks to confirm what’s selling and what’s not. Analyze your processes to make sure they’re efficient. Perhaps you could save money by investing upfront in a software program, rather than performing certain tasks manually. Also, check in on employees to ensure their responsibilities are still relevant to the direction your company is heading.
Prepare for Working Capital Shortages
Finally, understand what kind of financing options you could potentially tap into, if you face a cash crunch. This could entail applying for a line of credit or identifying agile lenders who are able to process a loan application and supply funds quickly. No matter what kind of business you’re in or how stable the current balance sheet looks, the most successful entrepreneurs know how to react during good times and bad.
All businesses rely on cash flow to fund day to day operations, as well as prepare for growth opportunities. With a bit of maneuvering and planning ahead, 2018 can easily be your company’s best year yet for cash flow—and profits.