5 steps to improve your cash flows

BANGALORE,INDIA.

Cash is that lubricant which keeps the wheels of business rolling smoothly. Cash Flow refers to the money flowing in and out of the business. It is exclusive of depreciation or transaction items like sales via accounts receivables.

 All the activities of the business like expansion, maintaining payroll, paying bills, and profit generation depends upon cash, so Cash Flow can be called the bloodline of any business.

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Major target of any business is to improve its cash flows. Here are 5 simple, easy-to-follow steps to improve your cash flows:

Vendor discounts: Opting for vendor discounts might mean that cash is flowing out of your business sooner than before — it could mean that less cash is flowing out. If your vendors and suppliers do not offer discounts, then you can negotiate with them to extend the payment deadlines. This will then give you more time to collect from your own customers before payment is due to your suppliers.

Making collections fast: If you have customers that are constantly paying late, try to find ways to improve your collection efforts. It may begin with sending notices in advance both through email and tele-call, or sending reminders of due payments and notices of penalties for late payments. If you don’t have penalties for late payment — this is a good time to put them in place — make them significant — highlight them on your invoices.

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Payment discounts to customers: Payment discounts to customers mean offering customers discounts for paying early. This strategy not only helps speed up and improve your cash flow but can also benefit your customers by keeping them loyal to you. Even you can attract more business from the customer segment by offering such discounts.

Raise Prices : As a bonus method of improving your business’s cash flow — you can raise prices. But one should be very much aware that you should only do so if your competitions’ prices are higher than yours, ensuring that the price hike does not make you costlier than your competitors. You do not want to drive away your current customers, especially if you are considered the low-cost provider.

Cross selling and up-selling: One should understand the fact that it is less expensive and more profitable to sell to the existing customers than to acquire new customers. Informing the existing customers about other products and service you offer or explaining them the benefits of your premium products and services not only can help you improve your cash flow but can benefit your customers as they may be unaware that you have offerings that can improve their lives or business. They can also bring you more business through word of mouth.

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By following these simple ways one can make a huge and positive impact on their businesses. These methods are just a few ways to improve your cash flows to start with. There are still many more to discover, but till then let the wheels of your business rolling using these methods to improve your cash flows.

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