One of the most common pitfalls of struggling businesses can be traced back to solvency issues. Solvency begins and ends with liquidity and liquidity come from a healthy business cash flow.
After going down this step-by-step tracing to some of the most crucial elements of running a successful business, it’s time to dive into how to secure your cash flow. This way, solvency won’t ever become a problem.
Keep on reading for our full breakdown of how to increase your business cash flow and the four main ways to achieve a healthy (and consistent) cash flow.
1. Generating Business Cash Flow 101: Your Product Pricing
As a small business just starting, you might be marking your products a bit too low for their actual worth.
Admittedly, you might be worried that your products wouldn’t sell as well if you raise their prices. The trick here is that you probably won’t know until you either try or conduct some rigorous market research.
The truth of the matter is that the higher the price of a product, the more likely it is to be perceived as more valuable. Giving your markup a boost is a simple and straightforward way to increase your cash flow without extra effort on your part.
2. Decrease the Lag in Payment Times
Unfortunately, sometimes you might have to deal with late payers. These can truly throw a wrench in your cash flow.
Depending on your situation, you might benefit from getting to explore the different types of business loans, and how they can temporarily fix any severe liquidity issues.
For now, you can make it easier for your customers to pay you on time by sending reminders, as well as giving them a variety of payment options, like online payments.
Furthermore, you can sweeten the deal by offering a nominal discount to those who pay you back early.
3. Lease Everything You Can
Assets are great for any business. However, the legitimate drain they can cause your liquidity is no joke. That’s why if you want to increase your cash flow, you can do so by leasing your needed supplies, real estate,e equipment, and anything else you might need.
The core benefit of leasing is paying for things in small increments. Thus, you’ll have a bigger amount of cash flow and cash on hand.
4. Check Your Customer’s Credit
When it comes to selling your products or services to customers that pay you in anything but cash, you’ll want to do your homework and check their credit.
This is especially important if you’re going to be dealing with long-term contracts and deals. You don’t want to find out that this client has poor credit, because they haven’t been paying you on time.
Ready to Give Your Business the Liquidity It Needs?
Figuring out how to balance your cash flow can be a bit tricky for any business, regardless of industry, especially when it’s in its startup phase.
However, once you’ve integrated some of our key tips on how to increase your business cash flow, you’ll be in a much more solvent position than you were before.
However, there’s still so much more to learn when it comes to operating a business. Make sure to check out our business section for all the tips and tricks that you could need.