When you first started your business, you may have had to wait a while before you turned a profit. However, you still need cash for day-to-day needs. You may be thinking “my income is steady and I’m reporting a profit. I don’t need to worry about cash flow.” The truth is, while it’s important to keep an eye on profits and income, cash flow is one of the most important parts of your business.
Cash flow is an important metric to potential investors, according to Corporate Finance Institute. Because income is calculated on an accrual accounting basis, it takes into account any transaction completed, even if cash isn’t exchanged. Because of this, the transaction may not match the cash flow sheets. This creates a problem when comparing the two. To make up for any differences, finding strategies to increase your cash flow can make your company look more appealing to investors.
Lease Office Equipment
You can’t avoid having office equipment. You can avoid making large payments on new office equipment by leasing them instead of outright buying them. If you’re opposed to leasing, consider buying older versions of the office equipment you want. Send Invoices Immediately
Instead of waiting a certain amount of time, send out invoices to your customers immediately. The sooner you get paid means you’ll have more money available for your business.
Use Electronic Payments
Almost everything is electronic nowadays, so why not make payments electronically? Electronic payments can be made the day they’re due, giving you more time to get the money together.
Take Out a Loan
Taking out business loans are a common part of business. If you need a quick influx of money for your business, loans can do that. Just don’t let it become commonplace in your business and don’t fall into substantial debt you can’t recover from.
Use a Cash-Back Business Credit Card
Business credit cards are another common part of business. Business credit cards are used for business purposes and, just like personal credit cards, can have some perks associated with them. Find a business credit card that gives you cash-back or some other perks you’re looking for. But like with business loans, don’t get to a place where you can’t pay off the card and start swimming in debt.
Create an Incentive and Fee System
Do you have a customer that always pays on time, or even before the due date on their account? Reward them in some way. Customers like to feel appreciated and will be sure to tell others when they’re treated well by a business. This gives you more business, increase your cash flow.
On the other hand, do you have clients who always pay late? As a business owner, it must be one of your pet peeves. If paying late is a common occurrence, consider implementing a late payment fee. The late payment fee counts as more money you’re earning, thus increasing your cash flow.
Improve Marketing
Marketing is a crucial part of selling your products. If you improve the marketing strategy for your products, it may catch the eye of new customers. New customers lead to an influx of cash to your business.
Open Interest-Earning Accounts
If you’re looking for a way to earn easy money, considering moving your money to an interest-earning account. Just be sure the account doesn’t have any restrictions on account balances, whether minimum amounts or the amount that has to be in the account to earn interest.
The business world is a hard world to break into. Having a steady and increasing cash flow will make it easier to stay in the business world.
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