The success of any business is determined by two metrics: profits and expenditure. These are the most important factors that any business should strive to keep in balance. For small business, the challenge is how they can make enough money to keep the doors open. Cutting costs, earning interest on your accounts and speeding up invoicing are among the few options that can help a business improve its cash flow. But small businesses must also look for ways to increase their revenues. This article looks at tips that can help a business improve its overall position.
Raising the price of your products too much may have a negative effect on your sales volume, yet it is the best strategy that can help a business improve its cash flow. Note that increasing the price of products has two effects:
If the price is too affordable, clients may not take you seriously and may think it is inferior. Do research so that you don’t overprice your products. Overpricing your goods or services scares away clients and negatively impacts the business revenue and cash flow. Find a price point that helps to boost your sales.
Old equipment can be inefficient and will take more space than modern equipment. Once equipment becomes outdated, dispose of it and buy a new model. If the equipment is too costly, consider leasing it. You can benefit long term from efficiency savings.
If the inventory or the equipment is obsolete, not being used or not working you may opt to sell it at a small fee just to free up more space. Also, if old products are still valuable, sell them at a discounted price before they become obsolete and worthless.
If you have a long-term contract with a service provider or a supplier, and you have established a rapport with them, it may be worth it to renegotiate the price. Most businesses would rather renegotiate than lose a customer. Any price reduction, even if it is small, reduces your expenses considerably in the long run. Check to see if there are services you aren’t using and consider discontinuing them. This way, you will reduce your costs and improve your cash flow.
Invoice factoring is a common funding solution businesses use to improve their cash flow. Instead of waiting weeks or months for customer payment, invoice factoring gets you paid same day on your invoices.
Marketing your business will certainly add a new client to your customer list. It helps to remind your old customers that you are still around, and it informs new clients that you offer the product or the service they are demanding. Target the untapped markets by introducing the product or service using both traditional and digital advertising methods. Marketing your products improves your conversions, boosts the image of your business and helps to enhance product credibility.
Most entities that are poorly run will always experience cash-flow problems. Ensure that you take your time to examine how you are running your business, especially how you allocate its resources. Identify areas where resources are not optimally utilized and consider reallocating them.
All businesses have their booms and lows. Analyze your business and note periods when business is high and when it is low. Use the information gathered to plan when to hire more staff, borrow funds and enhance your marketing campaigns.
There are interest earning accounts that offer competitive rates, and allow you to withdraw the cash whenever you need it. They pay interest on each dollar saved every day. Therefore, instead of letting your money to lie idle, deposit it in these accounts and earn some interest on it.
Receivables that prove difficult to collect should be forwarded to a collection agency. These are trained professionals whose work is to pursue such debtors for a fee. It frees your employees and allows them to concentrate on their work. It also gives you peace of mind. If you choose invoice factoring with TCI Business Capital, we provide a dedicated collector for you at no additional cost.
In conclusion, it is important to note that there are more methods and tactics that small businesses can use to enhance their cash flow. However, converting sales into cash as fast as possible is the best way to increase cash flow. Ultimately, invoice factoring solves this problem for you as your invoices are turned into same-day cash. When was the last time you took a step back and looked at your business? Now might be a good time.
TCI Business Capital is an invoice factoring company serving businesses across the United States. For more information on factoring, call (800) 707-4845 for a free, no-obligation consultation and quote.