When it comes to business, many view the number of sales or clients as a true measure of success. In fact, the success and stability of any business comes down to one factor: cash flow. Having an ample cash flow allows any business of any size to plan for the future, invest in growth, buy materials, purchase software, pay wages and navigate through a period of decreased sales or income.
There are many common financial mistakes business owners make, so it therefore comes as no surprise that lack of cash flow is frequently stated as the most common cause for businesses closing their doors.
Ask for Deposits
Fulfilling a large order can seriously dint your balance, meaning your business may struggle. To combat this, you could consider charging 50% deposits for large orders, which will ensure you are able to complete the shipment and keep your business afloat. Just make sure to include this in your terms and purchase agreements.
Fast Payment Discounts
While this may seem counterintuitive, offering customers a discount can prove beneficial. Rather than having to wait for your invoice period, offering a small discount for early payment can be a great incentive for your clients. It’s also mutually advantageous, boosting your cash flow and saving the customer money.
Consider Subscription Services
Whether a subscription method is viable depends upon the type of business you own, but if you sell goods that are purchased at regular intervals, this model could work. When you have a subscription-based service and partner with an Australian Direct Debit Provider will bring in frequent funds on a consistent and reoccurring basis, increasing cash flow and helping you to plan for the future. Direct debit payments happen automatically on the payment date, so you can ensure you get paid for your services every month.
Utilise Invoice Discounting
In simple terms, invoice discounting involves selling unpaid invoices to a third party, who will then lend you a cash advance of an agreed percentage of the total invoice, for a small fee. This means you no longer have to wait for an invoice to be paid and have the capital required to build your business.
Negotiate with Suppliers
In addition to capitalising on revenue streams, another fantastic method of boosting cash flow is expenditure. One area that can really save money is by renegotiating prices with suppliers. Successful negotiation could result in discounts for bulk orders or faster shipping at no extra cost.
Compare Utility Costs One of the largest expenses that many businesses incur is utilities. When continually powering computers and machinery, operating lights and turning on heating, energy costs can soon mount. Comparing prices could save you a lot of money every month, freeing up capital to invest in what matters.