As a small business owner, you rely on a healthy cash flow to keep your company running smoothly. Without enough cash in hand, you can't pay your employees, purchase new inventory, or keep your equipment in operation. Unfortunately, when you are a small business working with limited financial resources, even minor disturbances in cash flow can deplete your reserves, causing big problems. Here are four ways to get your cash flow back on track and improve your profitability.
- Launch a promotion.
One of the best ways to increase your cash flow is to bring in more business. Consider having a sale or a promotion designed to increase interest in your products or services. To ensure the success of the event, you should promote it on as many marketing channels as possible. In addition, it's also important to make sure that the promotion doesn't compromise the profitability of the sales you make, as this could have a negative effect on cash flow.
- Focus on accounts receivable.
In some cases, a business's cash flow suffers because customers don't pay their bills in a timely manner. If your company has a significant number of unpaid accounts, consider ramping up efforts to collect from these customers. Begin by sending notices and calling the customers in question. In many cases, simply reminding the customers that their bill is overdue will be enough to motivate them to pay. If you still aren't able to get the payments you need, consult a professional for assistance.
- Change the way you pay for things.
If your business is running low on cash, you may be able to boost cash flow by changing the way you pay for the products and services you purchase. Consult each of your vendors about their credit terms to determine whether a different arrangement would be more profitable. For example, some vendors may offer you a discount if you pay your bills early or with a specific payment method. Likewise, other vendors may allow you to make payments on larger purchases without paying any interest. Take advantage of all of these opportunities to improve your bottom line.
- Sell or lease assets.
If you have assets that you aren't using and/or don't need, consider selling or leasing them to generate some extra cash flow. For example, if you have extra equipment or extra space in your office building, leasing it to other companies can generate a regular flow of extra income.
These are just a few of the strategies that can help you improve cash flow and get back on track financially.
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