As we begin 2021, business owners around the nation are wondering what they can do to increase their cash flow. And can you blame them? Making money in the new year is a priority for businesses everywhere! However, making and KEEPING money in your business can prove to be a challenge for some. We want to help you with any stress that the idea of cash flow brings to the table. With a few minor adjustments, we can help you refocus where your cash is flowing and can inspire you to keep more of it in the bank than ever before. Today, we are sharing 9 cash flow tips for 2021 that will help inspire you to make more money this year!
9 Cash Flow Tips For 2021
1. Hidden Sources Of Finance
Many business owners think of borrowing loans from the bank when they’re short on money. But, there are many other resources that you can tap into before you head down that path. You can often free up funds just by re-examining the business and operating systems that you’re using. You might find extra expenses you can cut, costs you can pair down on and these funds might be sufficient enough for your immediate needs.
Speaking of freeing up funds within your business, taking a look at your assets could be a great place to start! Your assets can include (but are not limited to) debtors, stocks, pre-paid expenses, vehicles, plant and equipment, fittings and property. Each of these is a possible source of funds if you’re willing to examine each of them and determine what you truly need. There might be hidden expenses there that you don’t need to spend, which can save you a lot of money in 2021.
Are you allowing some of your customers to have the free use of your money, systems, or products for months? This can be a common occurrence in small business. Sometimes, the owner of the business can be so busy getting the business off the ground that they don’t pay enough attention to the basic business procedures. Many customers will take advantage of this “free money”, but in the process your business will suffer. Consider implementing a system to get all debtors current and up to date. This will bring in a good chunk of cash and can help to eliminate any stress too.
Make sure to get all invoices out promptly. If you can become efficient at getting invoices out early, your cash flow can begin to arrive in a timely fashion which will benefit everyone short and long term.
5. Change Your Terms
Consider changing payment terms for new customers that do business with you in 2021. Can you reduce the payment terms to 7 or 14 days from the date of invoice? Implement a good follow up system that can allow you to receive payment faster which will help speed up the cash flow inside your business.
6. Follow Up
Make sure you’re following up promptly when invoices aren’t paid by the due date. You can be polite, but firm with your customers who owe you payment. The products and service that you offer are worth getting paid for! So don’t be afraid to remind customers when they are overdue. Remember, if you don’t have time to do this yourself, make sure you appoint someone to do this for you. There is fortune in the follow up and if you aren’t following up with customers, you could be missing out on a large amount of cash flow.
7. Implement Cash Flow Software
If you haven’t already, make sure you have an awesome cash flow software program that can keep you on track. At GeneralCents Accounting, we use and use Clockwork. With Clockwork, you can make more collaborative decisions on what you’re spending, where you can cut costs, and how much you can invest in growth by working with your team on a real-time dashboard. Clockwork allows anyone, financial professional or not, to have a mastery of the numbers and to help them gain a deeper understanding of their business. To check out Clockwork for your business, click HERE.
8. Accounts Receivable
You can establish the average age of your Accounts Receivable and set a goal to reduce this age by setting a target every month. Setting up an accounts receivable aging report can be really beneficial!
Finally, consider your suppliers as a possible source of funds. Ask for extended payment terms to give you the opportunity to sell the goods first before payment is due. If the supplier won’t budge, try splitting the order in two and offer to pay normal credit terms (30 days) on one half of the order and 90 days on the other half. Your suppliers will be more likely to agree to this kind of arrangement if you’ve paid them promptly in the past. And, it can increase your cash flow in the process!
In conclusion, there are many different ways to organize, increase, and boost your cash flow this year. We are passionate about helping business owners THRIVE inside their businesses so they can be FREE. When you are freed up to live inside what you’re passionate about, the opportunities to live a fulfilling life are endless! And, we can help! If you’d like to receive assistance with your cash flow inside your business among other things, we would love to partner with you. Schedule a FREE Discovery Review Session today. Let’s work together to grow your business in 2021!