What a Business Owner Needs to Know about Cashflow
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Let’s face it, you can’t run a business without cash flow, right? Sure, you could borrow money to get started, but to run day-to-day operations, keep up with inventory, and pay the bills, you need cash.
So why don’t more business owners prioritize this? It’s important for you to put your focus on cash flow if you want your business to succeed. Here’s how.
Work on Credit
While you don’t want to get yourself in over your head in debt, having a little longer to pay for supplies and services can increase your cash flow.
Work with your suppliers and vendors to get longer payment terms to stretch out your cash flow. This will give you more cash for day-to-day operations so you can pay your employees and run your business’s daily operations.
If you have a surplus of cash, don’t be afraid to ask your suppliers and vendors for a cash discount. They’ll often provide a discount for getting paid upfront versus having to wait 30 – 90 days.
Watch Accounts Receivable
Accounts receivable is another way you keep your business running. If you don’t stay on top of it, you could get further in the hole than you thought possible. Having someone dedicated to following up with all accounts receivable and ensuring you get paid on time is the key to your business’s success.
Typically you don’t have to hire someone just to handle accounts receivable. Just adding the task to someone’s responsibilities is enough since it takes only a few minutes to send a follow up email or make a quick phone call.
Sell Unused Assets
Chances are you have assets lying around that you don’t use. Rather than letting them depreciate further and hold onto your cash, liquidate them. Today it’s easier than ever to sell assets on sites like eBay and Facebook Marketplace.
If you have equipment that sells for more than most businesses can afford, consider setting up a lease to own program or simply a lease program. You’ll earn monthly income and free up more cash to continue operating your business.
Get Creative with Sales
If business is slow or you need a cash boost, get creative with your sales. Run a promotion for current customers or offer specials only for new customers. Bring more awareness to your business and a boost of cash so you can keep running your business.
Use social media, email marketing, and local promotion opportunities to your advantage to increase your sales and your cash flow.
Don’t ignore cash flow – it’s the most important part of your business. While you can run on credit for some things, it’s not always possible. Cash is necessary for daily operations and paying your employees.
Prioritize cash flow and watch how the trajectory of your business changes. If you have any questions or need help figuring out your plan, contact us today!