The following tips to maximize cash flow are just some ideas to get you starting to keep more cash flowing in your small business. Whether your small business is a retail store or a small home office for a consulting business, cash flow is definitely the source of everything. You should take precautions to safeguard your cash and make the most of what you have.
Here are some ideas.
10 Tips to Maximize Cash Flow in your small business.
Identify any seasonality for your small business. For a retailer, your peak season would probably be Christmas, and your slow season may be January-February. For a contractor, your peak season may be the summer, and the slow season would be winter. The point? Save money from your peak season to help you make it thru your slow season. Maximize cash flow.
Plan for major purchases. Instead of counting on loans or credit cards, plan ahead. Maximize cash flow by saving today for tomorrow. Maybe you’re growing out of your home office and will be relocating in a year or two. You’ll need some furniture and fixtures, plus paying rent. Start setting aside some cash each month towards that goal. Growth is great. Unfortunately, though, growth has also shut down some businesses for lack of cash flow.
Go to the bank for a small business line of credit when you don’t need it. Banks don’t loan money to businesses that need it, as the saying goes. When cash flow is positive and business is good, that’s the time to arrange for credit to cover you when things take a downturn.
Try free advertising as much as possible. Word of mouth and referrals from happy customers have always been the best advertising. Encourage your customers to refer you to their friends and neighbors. Be active in your community, let people know you’re there. Also remember your employees, if your small business has any, are also advertising for you whenever they talk about you, so make sure it’s positive!
Don’t think you always need the biggest and baddest of anything. Use what you have until it breaks or you outgrow it. Maximize cash flow by really getting your moneys worth out of things. Buying new is fun, but if you buy secondhand furniture, for example, as long as it’s in good shape you save.
6.Keep your ego out of it. I knew a small business owner who put his face on a billboard, and was really excited that his friends saw it. That’s great, but did it sell your product or service? Keeping your small business financially healthy may mean driving a used delivery van until you have the sales and profit to afford new. Maximize cash flow by making every dollar contribute to your bottom line.
Keep on top of your receivables. Have a process in place to keep in contact with your customers. It’s easier to collect a 60 day invoice than a 180 day invoice. Send out reminders and past due notices. I have a process that has worked well for me.
Pay your bills on time. Avoid late charges. They add up to hundreds of dollars in a hurry. When your business slows down, use your line of credit to keep up to date.
Monitor your checking account often. Bounced checks are costly. Maximize cash flow by asking your bank about interest bearing checking accounts, and ask about overdraft protection. You may also consider hiring a Singapore audit service to help you check the accuracy and reliability of all the accounts you have in your financial statement.
Monitor your inventory. Don’t have too much product sitting around, that’s your money sitting there. Mazimize cash flow by not tying it up in inventory you won’t use for 6 months. You don’t want to run out of product, though, so track your orders and figure out how much you’ll need in the next month or so, then add a safe cushion. Keep on top of your purchases so you’ll have what you need when you need it, just in time.