Keeping your cash flow rolling along is essential for running a small business and for your own peace of mind. You’d think it would be simple. Just make sure you have more coming in than going out. But with the ups and downs of business, it takes a smart strategy, planning and the discipline to monitor your finances on a regular basis. Here are a few tips that can help you maintain a steadier cash flow.
It’s your business, so you have the power to negotiate. Make sure your customers are paying as fast or better than the terms you have with your creditors. How do you get your customers to pay even faster? Consider discounts for early payment and penalties for late payments. Then make sure you follow up quickly on past due accounts. The best way to manage cash flow is to actually manage it.
You can’t really plan ahead too much. Keeping your eye on the future lets you be ready for dips in revenue. So, plan your cash needs for next quarter, next year and years ahead. Then set weekly check-ins to make sure you stay on track. That way, if you see a problem coming, you can manage it before it affects your cash flow too seriously. This also allows you to better budget for expenses and invest with greater confidence.
Don’t rely too much on any one customer.
You’ve heard the expression ‘Don’t put all your eggs in one basket’. It’s a good one. There’s a lot of wisdom in not relying on one single source too much for revenue, but diversifying among multiple customers. That way, if one goes away, you’ll still be okay. Also, try to sell across a variety of platforms. With more variety, you’ll also see steadier cash flow
Make paying more convenient.
The easier it is to pay you, the more likely it is that you’ll get paid on time. There are a lot of ways to receive payment these days; credit cards, B2B payment gateways, mobile, PayPal. Venmo. Just choose the options that work best for your customers with the lowest fees for you.
Nothing costs more than people, especially if those people aren’t staying busy. It’s best to do more with less for a while, even if everyone has to work a bit harder. Find ways to keep your staff motivated while your business builds and reward them for their loyalty. Better to be half a person short than half a person over budget.