How To Keep Your Cash Flow Flowing

For small business owners, each transaction can cue your inner happy dance. Whether you share it with the world or do your best to keep your excitement to yourself, it’s a great feeling!

While making sales is fantastic and validates your choice to open your own business, you need to be careful when planning what to do with your profits. Having cash in the bank feels great, but just like cash in our wallets, it tends to disappear without us knowing what we spent it on if we're not paying attention.

It’s so important to keep the cash flow flowing for your business’s success. To help you get your business where you want it to be and keep it there, I’m sharing cash flow strategies for survival. After all, you’ve invested a lot of time and money into your business. You owe it to yourself to manage your cash flow to help your business grow and prosper. 

8 Cash Flow Strategies To Implement For Your Business

Keeping the cash flow moving goes deeper than getting paid. In fact, there are several ways to strategically increase your cash flow to help your business grow. 

1. Know Your Expenses & Think Twice Before Offering Discounts

Is bringing in new customer volume worth offering a discount? Not always. In fact, there are several business owners who will be quick to tell you they regret getting involved with coupon sites like Groupon. 

Whether you’re considering offering a friend and family discount or offering low prices on certain products or services to the masses – can you really afford it?

The answer depends on your expenses and cash flow. 

You need to be well versed in your current and future expenses before you offer any type of discount. Will the discount allow you to break even? Or will it result in you operating at a loss? Moreover, can your business afford to simply break even without seeing a profit?

If you don’t have a solid answer to these questions, then you are not in a position to offer a discount.

Ready to truly understand your business’s finances? Download 6 Mistakes Every Business Owner Needs To Avoid today!

2. Inject Value Into Your Offerings

While offering discounts may not be in your best cash flow interest, you can still entice potential customers by adding value to your existing offerings. 

Bundle Products & Services

Bundling products and services together can inject both perceived and tangible value into your offerings. Look at your own utility bills. Do you have your cell phone, internet, and cable bundled? Would you have all three of those services with the same provider if they weren’t bundled together?

Maintenance Agreements

If what you’re selling requires maintenance, a maintenance agreement can be a great incentive to potential customers. Think about the process of buying a new car. If you know what you want and are debating between two dealerships, will you go with the one that will provide free oil changes for the next few years? Not worrying about those expenses may even be worth spending a little more on the car. 

Money Back Guarantee

Removing the risk from an investment is a great incentive for buyers. A guarantee lets customers know you stand behind your product. Not having to worry about malfunctions or flaws in a design makes customers more confident in their purchases.

3. Create A Back-End Offering

If you are offering a product or service at a special price to bring in new customers, make sure you’ll make your money somewhere. 

For instance, if you offer a free consultation, be firm in your price for any future meetings, consultations, or services. 

This is also commonly seen in services like catering. The first hour may be at a steep discount in comparison to the higher price of any additional hours. 

Feeling lost when it comes to cash flow and other aspects of your business’s finances? Download 6 Mistakes Every Business Owner Needs To Avoid.

4. Implement Loyalty Programs To Encourage Repeat Business

Some businesses don’t see a real profit until the 4th or 5th time a customer makes a purchase. For these businesses, brand loyalty is extremely important to encourage repeat business.

Structure a loyalty program that will keep customers coming back for more. However, be sure to carefully track all purchases and don’t simply give out easy to hack punch cards. 

5. Pay Bills & Other Expenses Strategically (Including Payroll)

Your money in the bank can do more than pay your bills. In fact, you can make it work for you by building interest. 

For this to work proficiently, money needs to sit in the bank for as long as possible. And this means that paying bills early or not being strategic with payroll can actually cost you more than you realize.

Schedule outgoing payments to send on the last day they’re due. Of course, this is all about increasing cash flow – so be sure NOT to incur any late charges. Furthermore, choose a payroll schedule that works best for your business’s cash flow. 

6. Prioritize Collecting Payments From Customers

While there are plenty of cash flow strategies, they’re not worth much if you don’t have money coming in!

If your business structure allows customers to pay after a service has been rendered, you may find yourself making several follow up calls to collect payment. Take collections off your to-do list with automated software. 

With the right software, you can have an invoice sent to your customer at the time of service. And rather than worry about being pushy with follow up calls, texts, or emails – have the software do it for you. You can create automation with email templates that are sent until payment is received. These emails can even include late fees* that your payee will owe if payment is not made by a certain date. 

*Please verify what kinds of fees you are allowed to charge and other requirements with your State Comptroller's office.

7. Be Firm On Your Credit Policies

If you offer credit to your customers, be sure to stand firm on your policies. Otherwise, you could end up losing money. A few best practices for allowing credit include:

✓ Prior to extending credit, run a credit check (with the customer’s approval). Make the credit check mandatory for any line of credit. Decide on your credit requirements before ever making a credit offer and stay firm.

✓ Send monthly invoices promptly and verify they’ve been received. Follow up right away if any payments are behind schedule. Or, of course, leave this to your automation process!

✓ Monitor your accounts and take note of late-paying customers. Furthermore, implement a cash-on-delivery policy for repeat offenders.

8. Use A Business Credit Card And / Or A Line Of Credit

Free up cash for everyday expenses with a business credit card. However, you need to carefully track all expenses and make sure you can pay off your credit card each month. Otherwise, you’ll pay off interest when you make your credit card payments. Moreover, research credit cards and choose one with reward programs that can reduce your expenses. For instance, some credit cards will offer cash back on certain purchases. 

Additionally, a line of credit may be useful to infuse cash into your operations. However, be careful not to get in over your head with borrowed money. If you borrow too much, you could cause cash flow issues down the line - making principal and interest payments will take away from operating cash flow.

Get In Control Of Your Cash Flow With Harrington Strategic Partners

As a business owner, you’re likely to learn something new every day. It’s important that you prioritize understanding your business’s financials among those lessons. 

Your business’s finances are much more than getting paid and making payments. In fact, with the right cash flow strategies, you can position your business to scale more quickly. 

But there are also several common mistakes you’re better off avoiding altogether. Ready to set your business up for success? Download my guide, 6 Mistakes Every Business Owner Needs To Avoid, today!