Any business running in the market judges its growth and the net cash flow at the end of the year. But, it becomes harder when your business grows. The cash flow management in offline mode turns out to be a risk. There are higher chances of human error that can disturb the entire cash flow of your business. Many businesses opt for automated custom billing tools that handle multiple business processes with automation. They handle all online invoicing, billing, cashflow, time tracking, and save all data onto the cloud for a lifetime.
However, let’s first discuss the strategies for cash flow management and terms to always focus on better management. Let’s get rolling!
What is Cash Flowing?
The cashflow term defines the action taking place with the cash. When the cash is received by your client it’s a cash inflow whereas when the cash is distributed to the employees or other expenses it’s a cash outflow.
Strategies to Improve Cash Flow Management
Correct strategies will lead you to success. In the same way, cash flow needs to be managed with accurate tips to avoid floating in between the river. Here are the effective ways for cash flow management:
No delay in Invoices
Committing mistakes and then pointing the other person to blame won’t be justified. Thus, if you send invoices late, be ready to be paid late.
If you don’t want to be paid late then you will have to send invoices early. If managing your invoices is becoming tedious, you need to switch to cloud-based accounting software. Expense reimbursement software, Absolute are some choices for creating invoices that have amazing capabilities. Invoices will be sent on time and the rate of the cash flow will increase.
2. .Get Clients to pay early
You have given the service on time thus you need to get paid on time. Thus, ask your team members to have a track over the cash inflow from the particular client. Actions that should to taken between the time period when invoices shared and waiting for the payment are as followed:
- Follow Up
Start taking follow-up with your client. First, start with sending official mail regarding the payment. Thereafter, if you fail to receive the revert follow up via telephonic call and ask for the reason for the delay in the payment.
- Share installment plan
In case, your client is unable to pay the amount in one go then you can explain your installment payment plan. At times, there comes a situation where there’s a sudden situation where expenses were more than income in that particular month. Thus, we should consider the situation of other people and give them discounts or installment plans.
3. Charge penalty for late payment
If your client cannot pay after discount or installment, then it’s time to be strict. You will have to charge a penalty for late payment.
Increase the product price
If you are running short with the cash flow, you need to increase the price of the product and services. Pricing is also the factor that gives the impression to the clients. Ask yourself:
- What is the current price of the product?
- Are you aware of the competitor’s price?
- How much manpower is actually required?
- Is my pricing compensated for the product development expense?
- Are my prices very low? Can it be considered a cheap product?
- Expand sales market
Well, have you ever thought of expanding your business? If not then think about it. Sit with your teammates and discuss ideas to expand the sales market. Here is few ideas to increase your sales:
- Add new product
You need to add a new product to your business. This will help in gaining sales. But, before adding the products research about the trending products and its market demand.
4. Move to new marketing strategy
With digitalization, marketing has also shifted to digital platforms. If you are still under door-to-door marketing you need to stop. As the entire world is available online and 70-80% of people prefer online shopping. Thus, start building your market strategy for social platforms like Facebook, Instagram, Pinterest, etc. You can include an affiliate marketing strategy for sales benefits.
- Encourage customers to buy
If you will be active then only your target audience will be active. Thus you need to launch offers, new advertisements, and new sub-products. This will encourage the customers to buy.
- Don’t forget loyal customers
While building new clients never forget your old and loyal customers. You need to have hold on your faithful customers. Encourage them to buy your new products. They are easy to tackle and will help in the sales market. Provide them offers and discounts. Happy customers are the best. You can ask them to grow your business amongst their contacts.
5. Reevaluate operating expenses
Managing the cash flow doesn’t mean only managing the cash inflow. It’s necessary to evaluate project budgeting, manage the expenses and reevaluate them. Else, there will be a disturbance in cash flow. If you are unable to manage manually then switch to cash flow management software. Here are some tips to reduce operating expenses:
- Cut short unnecessary expenses:
This is an obvious word but mostly ignored and hard to understand. Generally, people start spending more when they earn well. However, the expenses should be cut down and moderate expenses should be made.
Like, check the number of staff. If the staff is more than required then you can make the counting less.
- Purchase More efficient equipment
Smart work will help you with cost and time efficiency. First have good research for the products, which are updated products, which product will be best in the same process. The updated equipment will help you less maintenance cost and also compatible devices will be available in the market.
6. Liquidate Old Inventory
Inventory is the largest expense source. You need inventory to make a profit but before buying make sure that the inventory is selling in the market. Properly invest after knowing which product is selling and has good turnover.
7. Pay Vendors at the correct time
You should be clear on which date you will pay your vendors. There are months in which you will have higher sales and months with lower sales. Accordingly, give the dates. It will have profitable cash flow management.
8. Start Business saving account
If you haven’t started yet, start a business saving account that will give you interest. This is the smart way to earn extra cash.
9. Cashback credit card
This is a great way to earn cash on your expenses. You simply need to use the card wisely and make sure all your payments should be done via this card.
10. Sell off invoices
Very few people are aware that selling invoices is a form of business funding. Here you can do invoice budgeting, invoice financing available for B2B companies. Factoring helps in getting paid on time.
Different strategies and correct mode is the best way to grow your business without any hurdles. The effective ways are mentioned above and the correct mode is the cash flow management software that will help you with your entire cash flow management, updates and data are saved on the cloud. It leaves no chance to disappoint you.