Cash is king, but cash flow makes businesses thrive. While you don’t need hard cash in your hands to run a successful company, you do need access to funds when and if you need it. From paying your bills and your employees to taking advantage of a time-sensitive deal that can help you grow your business, there are many reasons why having a healthy cash flow is essential.
Start a Development Fund
If possible, always start saving. Saving for a rainy day can help you accommodate those unexpected costs outright, instead of looking elsewhere. Considering how narrow the profit margins can be for certain business models, however, this won’t be the ultimate go-to. You may only be able to put away a small amount, in which case, this emergency fund is better off as a development fund. You can use that money towards your R&D, renovations, new equipment, and so on.
Know How to Release Your Cash
The most frustrating experience occurs when you technically have the money you need but don’t currently have access to it. This commonly happens with invoicing payments. The approval and transfer process can take a while, especially in larger companies that have a lot of payments to process before they get to yours. This doesn’t mean you won’t get the money, but there is a delay. This delay can mean late fees, losing out on opportunities, and can even worsen partnerships.
Knowing how to release those tied-up payments is key, and debt factoring can be the solution. Essentially, debt factoring allows you to sell unprocessed invoices to a provider to get cash quickly. You can also establish a long-term partnership for a fixed yearly fee. Debt factoring lets you free up your cash flow. Many providers also offer credit control to help ensure all your customers pay their invoices. As there is a large cost difference between factoring companies, you’ll want to use a broker like fundinvoice.co.uk to find the best solution for your business.
Automate Finances
Speeding up your financial services can also help streamline cash flow. Using automation tools, you can send invoices out faster, chase up unpaid amounts automatically, and even send payments immediately. This helps speed up cash flow and minimises any sort of late fee that can come from forgetting to make a payment or making a payment late. Using automation is a particularly great way to ensure your employees at least are paid promptly and on time every month. Meanwhile, suppose you are running a restaurant; you can check out DataDreamers to help you automate payments allowing your customers to pay quickly and conveniently without worrying about waiting in line. Additionally, it can reduce costs associated with manual payment processing, such as cash handling fees, and facilitate your cash flow, enabling you to grow your business faster and more efficiently, resulting in higher sales and profit.
Require Half Payments Upfront
When jobs, services, or orders are particularly large, you need to demand a partial payment upfront. This is particularly important if the job or order passes over payday. With an upfront payment of 50%, you can then manage your cash flow better for longer jobs. This also helps you recoup losses if buyers suddenly disappear. You may be surprised at how often a big order can be made, and then contact simply stops. Upfront payments can protect you if the company goes out of business and can help you manage your payments during the work period.
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