No matter if you’ve just started your business or you’ve been around for years, you want to ensure that you always have enough available working capital. If you don’t have enough cash for day-to-day operations, you could find that your inventory amounts suffer or that you don’t have enough to pay your employees. As a business owner, one of your main focuses should always be how you can increase your working capital. Here are some ways that you can improve your cash flow.
Review Your Inventory
Sometimes, you find that you love a product more than your customers do. Then, because you’re emotionally invested in it, you keep spending money on it, hoping that it will take off with your customers one day. When you are emotional about your inventory instead of objective, you cost yourself money. Instead of buying more inventory that won’t sell, get rid of what you have remaining of that item and focus only on inventory that will make you money.
Lease What You Need
It may sound counterintuitive to lease instead of buy, but it’s your best option when you’re trying to increase your cash flow. When you spend all of your available capital on a new piece of equipment, you won’t have the money necessary for operating costs. When you lease something, you pay for it in small monthly amounts, which will increase the cash you have available. Furthermore, leasing is beneficial because you can write your payments off on your taxes.
Offer Customer Incentives
If you have a problem getting your customers to pay on time, consider giving them a discount if they pay their bill ahead of time. Customers love to save money, so they’ll likely be more than willing to pay early. Then, you won’t have to struggle to pay the bills while standing over a massive stack of accounts receivables.
You could also consider giving customers a discount or free item if they refer other people to your business, resulting in a sale. If you do this, you’ll likely find that your business picks up along with your available cash flow.
Find Passive Income
One often-overlooked method of increasing cash flow for businesses is finding a passive income stream. You put in some initial work and money and then sit back while the money comes in with little to no extra work from you.
For example, you could buy real estate and use it as an investment property. Or you could sell products online where you supply the design, and then a company produces the item and ships it for you.