Improve Your Company's Cash Flow
If you want your company to grow, cash is a must-have. Sure, you can squeeze by for awhile without it, but eventually you'll need more than debt financing and credit lines to get where you want to go. You have an opportunity right now to take immediate steps that will help your business improve its cash flow. The trick is to leverage that cash flow to create more cash flow.
Here's how you can do that:
1. Develop Growth Strategies – Before you start making improvements, you need to know where your company is going in the long term. Identify what pieces of your business need the most assistance, and then develop strategies that will help those areas grow. If it takes time for each strategy to come together as a cohesive whole, so be it; but if there's an opportunity for quick results, go for it! Once you've developed your growth strategies, stop evaluating and start implementing them right away. Don't worry about timing; just get the strategy started and get buy-in from key stakeholders.
2. Simplify The Sales Process – You may have no choice but to expand your sales force, but there are things you can do to reduce the amount of time it takes for sales transactions to take place. The simplest way is simply to simplify your sales process. For instance, use a simple system that cuts out paperwork, helps customers track orders and provides a centralized point of contact for customers. Another way is to use the Internet as an online customer-relationship storage facility for product information and customer data files. You could also consider using an automated order-entry system that requires customers to type in their order information once on the company website and then fill out less paperwork on subsequent orders.
3. Speed Up Your Cash Flow – Here are some ways to speed up your cash flow: 1) If you have customers who owe you money, develop collection strategies that remove a burden from the sales force and place it on the accounting department, like sending out invoices when products are shipped rather than at the end of each month. 2) Try using a bank that has branch locations that your customers visit frequently so they can pay their bills right away without having to wait for statements to be mailed. 3) Develop an automated system that allows customers to pay their bills online: it's fast, safe and convenient. 4) Offer multiple payment plans; not everyone can afford to pay in full immediately. 5) Offer extended payment plans or do the transaction on a net-30, net-60 or net-90 schedule. 6) Consider hiring a third party to handle collections. They'll work hard to get your money back and they may even offer you additional services that your company can use in the future.
4. Create A Network Of Partners And Dealers – If you're selling a product, find out whether there are vendors who can add value to your products before they're sold and after they are sold. It's usually cheaper and easier for customers to buy $1,000 worth of products if they come from two vendors they trust rather than one vendor at $800. You can also speed up the payment process by offering a discount to customers who buy products from more than one vendor. If you're not selling a product, find out if there are vendors that do sell products similar to yours and find ways to link them up with your customers: they can provide additional value at lower cost and faster turnaround times.
5. Streamline Your Operations – The tighter your operations are, the quicker your business will become cash-flow positive. The trick is knowing which areas of the business are taking up too much time for too little return, and then streamlining those areas. For instance, make sure that any forms that need to be filled out are as short and simple as possible. You could also consider automating tasks with technology like microwavable forms, automated phone systems and digital signatures; they'll save time and effort while promoting efficiency.
6. Develop A Credit Culture – Make it easier for customers to buy your products by extending credit to them. Also develop a way for your customers to pay you back quickly and easily: offer multiple payment plans or promote a cash discount for paying early.
9 Steps To Better Cash Flow [END ARTICLE]
If you want your company to grow, cash is a must-have. Sure, you can squeeze by for awhile without it, but eventually you'll need more than debt financing and credit lines to get where you want to go. You have an opportunity right now to take immediate steps that will help your business improve its cash flow. The trick is to leverage that cash flow to create more cash flow.
Here's how you can do that:
1 . Develop Growth Strategies – Before you start making improvements, you need to know where your company is going in the long term. Identify what pieces of your business need the most assistance, and then develop strategies that will help those areas grow.
If it takes time for each strategy to come together as a cohesive whole, so be it; but if there's an opportunity for quick results, go for it!
Once you've developed your growth strategies, stop evaluating and start implementing them right away. Don't worry about timing; just get the strategy started and get buy-in from key stakeholders.
2 . Simplify The Sales Process – You may have no choice but to expand your sales force, but there are things you can do to reduce the amount of time it takes for sales transactions to take place. The simplest way is simply to simplify your sales process.
3 . Speed Up Your Cash Flow – Here are some ways to speed up your cash flow: 1 ) If you have customers who owe you money, develop collection strategies that remove a burden from the sales force and place it on the accounting department, like sending out invoices when products are shipped rather than at the end of each month.
4 . Create A Network Of Partners And Dealers – If you're selling a product, find out whether there are vendors who can add value to your products before they're sold and after they are sold. It's usually cheaper and easier for customers to buy $1,000 worth of products if they come from two vendors they trust rather than one vendor at $800.
Conclusion
Cash is a necessary aspect of any business because money is needed for whatever they do. However, many businesses do not realise the need for cash flow and how to gather it in a more efficient manner. Cash flow is not about the size of your salary; it's about having that money in hand at all times no matter what happens to the business. Cash flow is important because it ensures that you have enough funds when you need them and can spend them on any commercial activities with ease. By understanding how to include cash flow into your business plan, you have an easier time securing financing which will help increase your success rate in spite of difficult economic market conditions.