3 ways small businesses can better manage cash flow
While the pandemic becomes less unpredictable, small businesses continue to face uncertain times. The fight against COVID-19 is certainly heading in the right direction, but there’s reason for pause in everyday life at home and in the workplace.
The health and safety of your employees and clients remains a top priority. Yet, there’s a strong desire to also stay on top of trends and sales to grow business.
As you navigate today’s challenging times, here are three tips on how you can better manage your cash flow and other business opportunities.
Practice proper cash management
The key to maintaining financial security is proper cash management. Access to fast cash empowers businesses to handle various sudden expenses, including liability costs.
In order to stay nimble, small businesses can plan on regular deposits to maintain their liquidity. This can also help minimize costs over the long run.
Choose appropriate payment method
Depending on the form of payment used for business transactions, there are benefits to using one form over the other.
Paying by check, for instance, generates a buffer between the time it is issued and the time it processes, which can take up to 14 days. The delay in payment can boost cash flow, if only temporarily.
Mailing checks requires additional planning because you’ll want the funding to arrive on time. Typically, businesses schedule out check disbursements. Recipients can be put at ease because they know the checks follow a regular schedule. So that’s an added plus.
Research technology based bill-pay services (i.e. Bill.com) that offer approval levels and control on release dates if you don’t wish to issue paper checks.
If cash flow is at a lull, businesses can turn to a credit card to pay vendors. In this case, businesses should keep a close eye on fees and due dates to avoid an overrun of charges for a simple payment. Concentrate on utilizing credit cards with cash-back rewards or mileage to utilize in travel. Banking online bill pay is a convenient way to reach others, but it can immediately tie up cash flow.
Issue invoices quickly
Maintaining cash flow isn’t the only payoff of sending timely invoices.
When businesses issue invoices early and regularly, the chances of receiving payment ahead of schedule are higher. Staying on top of invoicing also clears out unpaid balances, which can be a catalyst for additional transactions.
Consider early-pay discounts or allow customers to pay online via credit card or ACH. You can charge-back the fees but customers appreciate the credit card points just as much as you may!
Deciding on the appropriate measures to maintaining cash flow is never a one-size-fits-all exercise. Business leaders must evaluate their needs and act accordingly.
At 5 Star Business Consulting, we understand that business demands are constantly changing, especially during this recovery period. Our mission is to help you maintain your business pace, including proper cash flow, through our support and advisory services.
You can leave the details to us, so you can do what you love the most about running your business. Contact us to learn more about our menu of business and consultative services. We’re here to provide the support so you can realize and maintain your true business intentions.