5 Tips to Improve Cash Flow for Small Businesses
There are times when running your business that you realize you are low on cash flow. This happens a lot of times as a result of slow or late payments from your customers. When considering how to fix this problem there are a few things that you can keep in mind so you can keep your business afloat.
1) Factoring receivables.
If your issue of low cash flow is a result of slow paying customers there are ways you can use these pending invoices to your advantage. Factoring receivables is different because it isn’t technically a loan, they are basically buying your invoice from you and then will pay you immediately.
2) Re-consider your pricing.
One thing to take a look at is if you are pricing your services or products too low. Research your competitors and see if their pricing is similar or higher than yours. If you see that you have room to bump the price, it may be worthwhile. Sometimes having a product or service too affordable may inhibit your sales.
3) Give your customers incentive for paying early.
One way that works to get your customers to pay early or on time is incentive. A discount on services or some type of free offer can be one way to encourage faster payments.
4) Change payment terms.
Another reason your cash flow problem is a delay in sending out invoices. If you send out your invoices at the end of the month, instead send them out early and consider changing payment terms to 30 days instead of 60 or 90 days. Any incentive for people to pay their bills on time will get your business into a better spot financially.
5) Lease what you can.
Rather than buying the equipment or office space you use for your business, lease where you can. In the long term it may seem better for you to purchase but at this moment since you are wanting to improve cash flow, you can cut back on short term expenses by taking this approach.