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Thankfully, there are a number of things you can do to boost your cash flow. Some of these steps, including shrinking unnecessary expenditures and increasing revenues, are rather obvious. But it’s not always clear how you should get them done. This article takes you through six things you can do to improve your business’s cash flow.
Provide Multiple Payment ChannelsIf you’re receiving your customers’ payments from one or a few channels—say cash or POS –you’re probably limiting the value of transactions your business can complete. It’s possible that a sizeable portion of your target market prefers paying for your products or services via means that you’re currently not offering to them. Catching more of them could require adding more payment options: debit cards, bank transfers, USSD, online gateways, etc.
Renegotiate Vendor PricesPerhaps a big chunk of your business’s spending goes to purchasing raw materials or stocking up your inventory. Why not try to cut costs on this front? You can do so by asking your vendors for a new deal. For example, you may promise to settle your bills with them much earlier if they reduce the prices at which they supply their products to you. Doing this will reduce your business’s cash outflows and leave you with more money to deploy to other important needs.
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Send Invoices out EarlierThe earlier you provide your customers with invoices concerning the payments they should be making, the sooner they’re likely to pay you (other factors held constant). Also, send them occasional reminders that they owe you. This will keep their financial obligation to you at the top of their minds, and increase your chances of collecting outstanding payments from them much earlier. Many invoicing tools allow you to do this through their platforms.
Incentivize Early PaymentsOne way to increase your cash flow is to encourage your customers to pay you earlier. Although it’s possible to do this by sending them reminders, you may get better results by rewarding them for settling their bills early. Promise them discounts or extra units of whatever you sell, and they’ll likely be more eager to pay up faster.
Eliminate Unnecessary SpendingUnless you review your books often, you may be unaware that you’re spending a lot on stuff that you can do without. Whatever form wasteful spending takes at your business, be sure to find it out and cut down on it. Adjust your budget so that it only caters to the things you really need. Besides doing this, you may take other measures like limiting the use of utilities on your premises, switching from paper to digital records, and outsourcing non-core tasks instead of hiring full-time staff to handle them.
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Run Better Marketing CampaignsThe quality of your marketing determines the volume of leads you’re able to generate. And your leads could become your customers if you sell them your products in a manner that convinces them. If you want to get more out of a limited marketing budget, aim your efforts directed at people who constitute your target market. Some social media platforms allow you to do this by selecting the specific demographic that will see your paid ads. Wherever you choose to run your marketing campaigns, ensure that your efforts are informed by real data about your potential customers’ needs and purchasing behaviour.
Final WordsIf your business is going to survive, it’ll need to be cash flow positive. This means that it should have quite a bit more money coming into it than what goes out of it. It all comes down to growing revenues and managing expenditures. You can follow the steps we’ve shared here to get your business on the path to better financial health. Featured Image Source: ABC Amega
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