3 tips to increase your business cash flow
Cashflow. It’s the lifeblood of your business because, let’s face it, without it, you have no business at all.
In business, particularly in the early years, cashflow can be really tricky. Tricky to increase and tricky to manage.
You have to spend money to make money, this is true, but some businesses shouldn’t be spending outside of their means either – it’s about finding that optimal balance between the cash that’s coming in and the cash that’s going out of your business.
So, how do you find that balance? How do you increase your business cash flow?
The Accountants at Crest Accountants on the Gold Coast share 3 of their best tips for increasing business cash flow.
1.Measure and forecast your upcoming cash flow
One of the most common reasons a business owner struggles with cash flow, is because they don’t have a strong understanding of their numbers. When you understand your numbers, you can make more informed decisions around tax, new equipment purchases or securing a business loan.
Measure your current situation, then forecast your upcoming cash flow – this basically means to estimate the amount of money you expect to flow in and out of your business.This should include all your projected income and expenses.
This will make managing your business cash flow easier by helping to predict surpluses or shortages of cash.
Make sure you keep your findings visible and up-to-date in your accounting software though. There’s no point doing all that hard work and then forgetting about it.
2.Review your customer and supplier relationships
Have good relationships with your customers and suppliers? Not only is this good for your business’s reputation, this can be good for your cashflow too.
How? By seeing how these relationships could help your cashflow.
An example of this is by turning your sales into dollars faster, by offering customers an incentive for early payments and a penalty for late payments. For example, discounts could be applied to any account paid early, and interest could be added to any invoice that has gone neglected for too long.
Supplier relationships could be reviewed too, such as discussing the possibility of extended payment terms in exchange for something extra you could do for them.
3.Revaluate your pricing
Are you selling your products for too little or undervaluing your services? Chances are you might be.
You may be concerned that by raising your prices your sales will suffer, but it’s important to remember, that when you raise the price of your product or service, their perceived value also tends to rise. So, don’t come to any conclusions until you’ve tested the market out first.
Do some research, test the waters and find your happy middle-ground for pricing – not too affordable, but not too expensive. Once you’ve found this, you may be surprised at how this helps boost your cashflow without losing sales.
Business cash flow is important. It’s about finding that optimal balance between the cash that’s coming in and the cash that’s going out.
At Crest Accountants on the Gold Coast, we have over 40 years’ experience in working with and advising business owners on cash flow management, forecasting, planning and more. We take the time to get to know our clients so that you feel confident we have your best interest at heart. Crest Accountants, accountants you can trust.
Let us help you find that optimal cash flow balance in your business. Contact us and book an appointment today.