A US bank study found that 82% of businesses failed due to poor cash management. Also, the research discovered that most entrepreneurs either relied on their personal finances or an income from another job to keep their companies afloat.
For a business to enjoy much success in an industry, it must become self-sufficient. To do so, you must look for ways to maximize your money and generate a bigger profit margin. Get started by reading these five actions to take to improve your small company’s cash flow.
If you don’t take charge of your finances, your cash flow will quickly spiral out of control. Rather than making uneducated financial decisions with your money, hire the experts to manage your finances.
For example, consult one of the most respected St Louis CPA firms for tax, bookkeeping, and accounting services. The experienced accountants will ensure your company pays its taxes on schedule, its books are in good order, and they can maximize your cash flow to support business growth.
Rather than paying large annual salaries for full-time employees, outsource various business functions to freelancers or agencies. There are many tasks you can outsource to experienced professionals, such as:
- IT management
- Human resources
- Graphic design
- Web development
Outsourcing could take some of the financial pressure off your company and secure its survival. Plus, as you are outsourcing to experts in these fields, you are getting high-quality work from it.
3.Renegotiate with Providers
Every nickel and dime will matter in business. Don’t allow one penny to go to waste by routinely reviewing contracts and service plans. Call service providers at least once per year to renegotiate rates. By doing so, you could save a significant sum on maintenance contracts, internet, software services, phone bills, and much more. If a provider refuses to lower their prices, research the market for a better deal.
4.Shorten Payment Terms
If your customers take a considerable amount of time to pay an invoice, you may need to shorten your payment terms. For example, you could slash your payment terms from 30 days to 14 days. Alternatively, state payment is due upon receipt of an invoice or request a customer pays a percentage of the fee before starting any work.
5.Increase Your Product Prices
If you have a poor cash flow, it might be time to consider raising your prices. While generating revenue is important, it is pointless if the company isn’t in profit. If you are tired of breaking even or struggling with debt, aim to find a balance between providing customers with a competitive price and compensating your business for its hard work.
Increasing prices doesn’t mean your company will lose customers, either. If anything, a customer might view your products or services as higher quality due to its bigger price point, so they might be willing to pay a little extra. Perform market research to identify a price that rivals your competitors and substantially increases your company’s profitability. It could transform your business’s cash flow.