Cash Flow Best Practices for Your Business
You have many responsibilities and goals in your company. From hiring and keeping the most talented employees to providing the goods and services customers want, it’s essential that you run an organized, efficient business. Ultimately, you want to build a strong company with good cash flow so you can sit on financially stable ground. If you’ve struggled with profitability in the past, there are some practices you can put in place to help increase your bottom line.
Give Discounts for Fast-Paying Customers
One of the biggest challenges companies of all sizes face is collecting payments from customers. While you probably have a core group of clients who always pay on time, you probably have others who are notoriously late or even some who get way behind on their accounts. You spend a lot of time and resources getting people to pay. Sometimes, you may lose money through these efforts. You can entice people to pay on time (or even early) by offering discounts for prompt payment. This ensures that you have better cash flow in your organization and that you’re not stressing out over missed payments.
Get rid of old or out-of-Date Equipment
Eventually, your equipment will wear out and become less effective. You may even have equipment or supplies sitting on a shelf or in a corner that you never use. These take up valuable space and uses money you could put to work somewhere else. Consider selling this equipment, especially if it no longer meets customer needs. Not only can you improve your cash through by doing this, but you may also see some tax benefits. You should frequently review your equipment and make sure it’s still doing the job you need it to do.
Ask for Deposits
You love it when customers order frequently and in large amounts. This can have a downside as well, however. It’s often harder to collect payment on high-ticket items. One way to get around this problem is the require down payments. This way, you get a nice lump some of cash up front to help infuse your bottom line. You can then accept payments over time.
Open High-Interest Accounts
You likely have a personal account that yields high interest, so why wouldn’t you do the same for your business? When you get some of these lump-sum payments, deposit the cash into a CD or money market. You can then watch your money grow and have it in reserves.
Every business needs strong cash flow. If you follow these practices, you can improve your financial picture.