Even a good market, cash flow challenges are bad enough. But in a bad economy, they can be the kiss of death.
So if you’re trying to come up with money to cover your bills on time during the slump, then these four ways to easily cure cash flow issues could come in handy.
- Eliminate needless costs for company
Pull your bank accounts out. Pull out your receipts with your credit card. Whose costs are you aware of?
Look at recurring monthly costs you should cut for the best return on investment.
In any industry, there are always several company tool subscriptions, newsletter subscriptions, and programme subscriptions.
And I will bet at least 5% to 15% of these are no longer being used or fulfilling their original function. Identify those, and automatically cancel them.
This little workout alone will improve your cash flow and save you a couple of thousand dollars a year.
Replacing costly services with cheaper services is another convenient way to cut costs. Substitute your landline phone with a paid Skype account, for example. Or find an open
source solution free of charge to supplement a paying solution.
You would be shocked by how many fine, inexpensive resources are available to you until you start investigating. (If you need help getting started, just ask your social network.)
- Faster Invoice, Slower Pay Bills
You have to do whatever you can to change the cycle when cash is streaming out quicker than it comes in. Since you ultimately want the money to pass out slowly than it comes in.
An simple way to do this is to raise more easily, then “float” the money on invoices.
So, for example:
See if you can get your consumers to pay faster if you usually invoice on Net 30 terms. Offer them a tiny discount, say 14 days, to pay the whole sum up front or within a shorter time period.
The quicker you get paid, the better it will be for your cash flow.
Holding your capital as long as possible is the second stage in the process. But that means you’re going to continue to try to postpone paying your suppliers.
For a single invoice, you can apply for terms or ask for an extension. Or you could consider paying with a credit card if you’d like not to deal with vendors.
You will automatically get an additional 25-30 days to pay for paying for a credit card. (Just make sure by the end of the billing period that you have enough cash to pay off the balance.)
- Tasks that are not the biggest and greatest use of your resources Outsource
If you do data entry where you can do jobs worth $1,000 an hour, so it adds to the cash flow concerns.
If you are still stuck in your company doing menial jobs, you will never have time to work on your project.
You need to work on doing activities that improve the monetary worth of your talents all of the time. A reliable freelance worker should be outsourced to any assignment that comes outside of the highest-value skill set.
For example, you could hire a Virtual Assistant (VA) to take care of some of the boring and repetitive things you have to perform on a daily basis if you are a lone entrepreneur.
Or to screen phone calls, take messages, and book appointments, you may contract with a firm. This alone could save a few hours a week conservatively, freeing you up to do the stuff that creates more sales and more profit.
- Don’t let the cash balance ruin a good month
If you’ve ever had a very good business month, so you know exactly how fun it can be. You know how enticing it can be to go out and buy the pricey thing for which you have been lusting.
There’s a piece of advice here: don’t buy the stuff.
Holding your thoughts in place.
When times are healthy, put aside enough cash so you can comfortably weather the tough months that may (or may not) come in the future.
This recommendation is, sadly, not generally pursued. Only look at the guys overseeing massive releases of items. The cash inflow encourages them to do dumb stuff… like buying expensive six-figure sports cars and 10,000 square foot bachelor pads.
This is an incredible fault.
Since one good month doesn’t make for a good year. For future profits, previous success is no certainty. The economic conditions of today are not tomorrow’s economic conditions. Etc, and so forth, etc.
It will very easily drag down your company if you get financially over-committed in your personal life.
Many who are able to forgo a luxurious lifestyle so that they can make smart investments and keep their firms going smoothly are the most prosperous business men (and women) I’ve met.
The most affluent are perhaps some of the most frugal.
It is the entrepreneurs who run lean operations who endure difficult times and gain longevity in their respective markets, even though the cash flow is good.
Employ these four methods for market optimization… be deliberate about applying them in your business… and you can easily cure your cash flow problems.
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