If you own a business, you know that it’s normal to have fluctuations in your cash flow. Perhaps you just had to make a large purchase that took a lot of your capital, or business has slowed down. Not having enough cash on hand can mean that you don’t have enough money to pay for day-to-day operations. When your cash flow starts to dry up, you need to know how to improve it quickly. Here are some ways to increase your business’s cash flow.
Get Customers To Pay on Time
It’s unfortunately very common for customers to pay late. Usually, it’s because they forget that they need to pay the bill. Instead of sending invoices and hoping that the customer pays them on time, send them a reminder a few days before payment is due. If they haven’t paid by their due date, give them a call and ask for payment.
You could also consider giving incentives to customers that pay early. For example, you could give a discount to anyone who pays their bill in full in the first week they get the invoice. Customers love a good deal, so you’ll likely see more payments coming your way if you incentive them.
Apply for a Line of Credit
A line of credit is always something helpful to have on hand as a business owner. Lines of credit are similar to credit cards in that you are approved for a total amount and are only charged interest on the amount you use. You can then continually use your available balance for as long as you pay it down.
Lines of credit are often thought of as lifelines in difficult situations for businesses. You don’t have to use it every day, but it’s there if you run into trouble and need it.
Manage Your Accounts Payable
If you haven’t switched over to accounting software to manage your books, you cost yourself money. You and your staff will be spending more time than necessary trying to keep track of invoices you need to pay and how much is owed. Additionally, not using accounting software could cause you to continually be late paying your bills, which means you’re likely charged late payments. When you have late payment fees, you’re throwing your money away.
The longer you work with companies and pay your bills on time, the more likely they will work with you regarding when your payment is due. If you can push your payment due date back from 30 days to 45 or even 60, then you’ll have more time to bring the money in to pay that bill.