- Figure Out What It Will Take To Turn A Profit
When you are first starting out, you should determine exactly when your business will start turning a profit. Although this won’t have any impact on your cash flow, it will allow you to set a goal for your business. You can tailor your cash flow management process with a focus on the future, keeping your eyes on the prize so that you can eventually start to make a profit with your company.
- Make Managing Your Cash Flow Effectively A Priority
Even though you can use profitability as a motivator, your ultimate goal should be to effectively manage your cash flow. Positive cash flow can go a long way toward setting your business up for success even if you haven’t yet turned a profit. The better you can get at managing your cash flow, the more likely you are to succeed.
- Keep Some Cash On Hand
Running a business can be unpredictable. At certain times, you may find yourself in a position where you don’t have a lot of cash coming in. By keeping some extra cash on hand, you can get through these lean times without having to worry about where the money is going to come from.
- Track Your Cash Flow In A Spreadsheet
You don’t always have to buy things or that said buy them new. Businesses should lease things that depreciate and buy things that appreciate – this is true for cars, computers and machinery. Buying second hand is also a good idea, especially when it comes to assets – you can get used boilers for sale that are as good as new ones and these can also save you on energy if you have an older option.
- Try To Get Paid As Quickly As Possible
Ideally, you should try to collect your account receivables as soon as you can rather than allowing them to go for too long before being paid. If possible, try to avoid any contracts that require net-30 or net-60 payment terms, opting instead for shorter turnarounds on your receivables.
- Provide Customer Incentives For Quick Payment
Consider adding incentives to encourage customers to pay as quickly as possible. For instance, if they pay within a certain amount of time, you may be able to give them a discount on the amount of money that they owe. You should also put strict requirements in place regarding how you will handle credit. Only the best customers should be able to charge products or services.
- Take As Long As Possible To Pay Your Bills
On the other side of the equation, you should try to get the longest possible terms on your accounts payable. Ideally, you should shoot for net-60 or net-90 terms. Just be sure to submit your payments on time so that you don’t get charged any additional fees.
- Look For Unique Ways To Get More Sales
Don’t be afraid to think outside the box when it comes to finding ways to increase sales. You may be able to offer your customers incentives for making purchases, hold a contest, or have a large-scale event to draw in a crowd.
- Assign Someone The Duty Of Tracking Your Company’s Cash Flow
Someone at your company should always be keeping an eye on your cash flow. Ideally, this role will fall to a seasoned employee. Be sure that they have clear instructions on when they should alert you to any changes in your cash flow.
- Take Advantage Of Technological Advancements
Technology has come a long way in the past few years. For instance, you can now store your company’s cash flow data remotely so that you can access it from multiple locations. If you choose to go this route, just make sure that you choose a secure storage solution so that you don’t have to worry about your data being compromised.