Often, startups and small or medium businesses that are B2B develop a culture of ignoring the cash flow while focusing on expanding the firm and other business goals. Although a firm needs to build a healthy relationship with its partner, it is also crucial to keep an account of cash incoming.
The cash flow shows the amount a firm gets over and above the company's expenses. After all, without profits, the company does not sustain itself long. Keeping track of cash coming in helps the firm make the right financial decisions.
So, having a 20 - 30% of monthly revenues in cash is crucial for a business as it allows the firm to reinvest in expanding the firm with capital assets purchases, signing a new contract, and others. But how to maintain a steady cash flow for your business? This article will walk you through the top 10 best practices for a continuous cash flow for your business.
Not estimating the profits and losses for a particular product before it is off for sale is the primary reason for a business failure. Commercial businesses or any other B2B business offer high discounts when their clients buy a product in bulk and repeat orders. It can lead to losses.
Therefore, before offering sales, you must understand the product's manufacturing and overall costs. Because selling at a loss can never lift your business as it reduces the procurement and the delivery cycle in the next production. So, understand the charges before signing any contracts, as it will help your cash flow be positive.
Offering a discount for early payments creates a win-win situation for you and your clients or customers because discounts attract people. So, when you announce a little offer on early pay, clients are more likely to pay in advance. This way, you will have a steady cash flow system.
Sometimes, a client follows the buy now-pay later path, or they do not want to pay in cash. In such circumstances, ensure sparing a moment to conduct a customer credit check before signing them up. If the credit score is negative, the person may not pay you soon. As badly as you want to make sales, late payments hurt your business more than not making a sale in a week.
Sending an invoice without errors soon after you make a sale is one of the effective ways to have a steady cash flow. Sometimes, the payments may take longer than usual because of an invoice mistake. Send an easily readable invoice with the due date in bold at the top and bottom of the invoice with all the terms if you charge the late fee. And mention the payment types you accept.
Currently, electronic payment systems are seeing a rise in the finance industry. So, with digital payment systems, you do not have to wait till your client pays you in cash. Your clients can effortlessly transfer your funds to your bank account directly. The digital payment system supports a steady cash flow method strongly.
Giving discounts might not be the right business strategy, but increasing the price while providing value in diversified ways can do it. It allows you to increase the price while it makes the customer feel crucial. The bundling services might include an additional warranty, a replacement policy, and others. So, you can cash in some extra amount along with the actual product money.
Rather than offering discounts to retain customers and clients to your business, you need to improve the quality of your product with additional benefits. In any supply chain business, high-quality products have a drastic growth. So, if your product is superior in the market and offers the best customer support, customers never move away from your business. Instead, your business grows through word-of-mouth, even when you charge a premium.
Sometimes, the supplier's charges can break the bank accounts. When you maintain good communication and relation with the agency or the brand, you can get them on to lower payment terms. So, offer them a soon pay if they give you a discount on the supplying charges with the right negotiation skills. Good relationships with your partners can help you save some bucks.
With a high-interest savings account, you grow your cash position as it provides you with high liquidity. Sometimes, the high-yield savings accounts offer the 17 times highest interest rates, higher than the national average. This means You can earn more from the amount you have saved.
Maintaining a steady cash flow account manually can be hectic, and chances are that you may make a mistake. So, choosing the best account software like Swipe can help your business grow as you learn more about your financial condition by reviewing the financial reports with the factual data generated by Swipe. With Swipe, you can keep an account for your money and manage your business.
Some of its features are:
1. You can customize the invoices from the templates and generate an invoice within less than 10 seconds.
2. You can manage all of your business accounts in one place.
Likewise, they have 41 features you can avail of for free on your phone or desktop.