Foolproof Hacks to Improve Your Cash Flow in Business
It’s a wonderful thing to think about the incredible profits that your business will have in the near future, but what matters more is how much cash is going in. Cash flow is what keeps your business running. The outgoing and incoming cash will determine how you can sustain your venture. Plenty of potentially profitable businesses go under because they don’t manage their cash flow.
However, there are tried-and-tested strategies that will prevent your business from failing and ultimately improve your finances. The following hacks will help you manage cash flow better and put your business to the next level.
- Keep Your Accounting Up to Date
Take into account all costs and expenses in running your business. Record keeping might be a hassle, but it can help you stay on top of finances. Take advantage of accounting software or apps such as Quickbooks, XERO, or Reckon to manage your finances on the go. If you haven’t got the time to manage your finances, hire a bookkeeper.
2. Plan ahead and Keep a Cash Reserve for Quiet Times
Seasonal trends will affect your business in one way or another. It’s a good strategy to plan ahead for when cash flow slows down. Keep at least three months worth’ of expenses in the bank at all times (more or less depending on the customer lifecycle of your business). Any more than this, it wouldn’t be an inefficient use of capital. Any less than this, and you’ll be cutting it too thin. If you’re going to take out a part of your reserve for emergency expenses, make sure to put it back in when you get another cycle of cash flow.
3. Set Up a Line of Credit Before You Need One
Having a business line of credit will give you a good hand when there are emergency expenses or contingencies. You can always tap into a line of credit for short-term expenses such as paying contractors, buying inventory, or sustaining daily operations. For bigger expenses like expensive equipment or getting a commercial space, go for traditional loans which will allow you to pay for it in a longer term.
4. Free Up Capital by Leasing Equipment
New equipment has depreciation benefits. The interest in equipment financing is tax-deductible, and you can use the cash you free up to invest in other revenue-generating activities.
5. Get Customers to Pay On time
The best way to boost your cash flow is to make sure that your customers pay on time. Incentivise them to pay on time with early payment discounts or other perks. On the flip side of this is to delay payments to vendors as long as possible to give yourself some leeway. Unless of course they offer an early payment incentive.
If you need working capital for business without having to touch your cash reserves, go for unsecured business loans. The loans require no collateral on your part. Quotes take less than a minute and the funds can be in your account in 24 hours. Check out Bizzloans Australia for quick funding approval across 800 financial products.