Did you know that 20% of new businesses fail within the first 2 years of opening? Even more worrying is only 25% of new businesses make it to 15 years or more.
One major reason why this happens is businesses don’t have a good grasp on cash flow. So keep reading to see 5 tips for cash flow management tips you can put into practice and keep your company thriving!
1. Keep Up With Bookkeeping
Without proper bookkeeping, there’s not much hope for your business. So don’t cut corners here, as it’ll heavily impact your company’s survival.
Professional accounting advisory is recommended since they can not only take care of all the small details for you, but they can also advise you on how to manage cash flow. This means you can offload this tedious task to experts and also keep your business running smoothly.
2. Increase Sales
Increasing sales will always improve your cash flow. But note that this doesn’t necessarily mean you need to go out and acquire new customers. Doing so can eat up even more cash.
Instead, focus on upselling and selling different products to existing customers. This is cheaper to do and can keep customers coming back for more, which will keep increasing your cash flow.
3. Cut Unnecessary Spending
Chances are, there are places you can cut spending to get more cash in your pockets.
Sit down and examine how much you’re spending and on what. It’s very likely you’re overspending in certain areas, so tightening the belt can help increase cash flow and stop you from paying unnecessary expenses.
4. Speed up Accounts Receivable
Whether it’s customers or payment processors, either can delay payments, which stops your cash flow. Have a more rigorous process in place and don’t let clients take forever to pay you. For example, you can ask for deposits or offer discounts for fast payments.
As for payment processors, keep checking in to ensure they don’t dilly-dally either. If it’s a constant thing, then it might be time to consider using a new vendor.
5. Improve Your Credit Policy
If you offer credit to your customers, then they can easily take advantage of that and negatively impact your cash flow.
When it comes to managing cash flow, you need to always run a credit check before you approve a line of credit for customers. You should also follow up promptly if people are late on payments and require them to pay a late fee. Keep track of these offenders and consider instituting a stricter policy for them, such as cash-on-delivery.
Practice Better Cash Flow Management
Cash flow management is tough to nail, which is why it’s always beneficial to enlist the help of professionals. Their meticulous bookkeeping will allow you to see where you need to tweak business operations. And as a result, this will help you fight against the odds!
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