According to the experts of business world, no company owner, and particularly no small business owner, is immune to cash flow concerns. Given the recent stock market collapse caused by the spread of COVID-19 across the United States and worldwide, small company owners’ finances are particularly precarious right now. Many firms are taking solid hit regarding cash flow.
In this crucial moment, if you are trying to find a solution here, john abio will be there to give you proper advice along with effective assistance.
What are the best ways for small companies to boost their cash flow?
You can lease instead of buying
Due to the fact that leasing materials, equipment, and real estate is often costlier than purchasing, it may appear illogical to someone who is just concerned with protecting the cash flow, or your revenue after costs are paid. However, until your business is cash-flow positive, you will want to maintain a cash flow for daily operations.
Leasing allows you to pay in tiny amounts, which helps with cash flow management and the payments are tax deductible for the business expenditure, so it will be a beneficial decision.
Receivables must be collected prior to payables
Although sales increase receivables, this is irrelevant if invoices are not paid by the due date. You have to collect all the receivables to maintain the cash flow positively.
Early payment discounts
Everyone likes an incentive and offering consumers a discount for paying their bills on time creates a win-win scenario for both of you. The customers will be happy, and you will receive the funds early which will help with the cash flow.
Do credit checking on customers
If a client refuses to pay in cash, be certain to do a credit check on them particularly before you sign them up. If a customer has bad credit, you should understand that there is a chance that you will not get timely payments.
As much as you want to make the sale, late payments will have a negative impact on your business’s cash flow. If you decide to go through with the transaction despite your poor credit, make sure to set the interest rate high.
If you are confused or feeling overwhelmed about this fact, you can always ask for help from ‘john abio.’
Enhance Your Stock Management
It is advised for you to make sure you have kept a record of your purchased items that aren’t moving as quickly as the others. In this way, no one will squander any significant amount of cash and there will be no detrimental effect on your cash flow.
Payments should be made electronically
If you pay online, you may postpone payment until the morning of the due date. This time purchase helps you manage your financial flow more effectively. Additionally, you may utilize a business credit card, since some provide a grace period of up to 21 days, which can significantly help with cash flow.