25 Simple Ways To Double Your Cash-flow Without Firing Your Staff
Cash. It’s the lifeblood of every business. Run out of it and your business goes backwards very quickly.
So what do you do?
- Ask away — Even if you’re dealing with larger businesses. If you don’t ask, you’ll never have it. Don’t be afraid to follow up and ask a few times. Persistency can pay off.
- Give value back — As an incentive for your customers who pay on time or early, offer a unique opportunity that is hard to find. Maybe it’s offering them a first in line opportunity to an event that’s coming up with a free ticket.
- Reduce the time it takes to issue invoices — How long does it take for you to issue an invoice from when the job is completed? What could you do to reduce this time in half
- Send friendly reminders — 5–7 days before the invoice is due, send a reminder informing of the upcoming deadline.
- Request credit card authorization — if you have customers that are paying recurring amounts, then by obtaining their authorization, you can automate on-time payments.
- Understand your customers — For those customers that typically always pay late, have a conversation with them about why. They may be going through hardship, your service may not live up to their expectations, or there might be inefficiencies on how they process invoices. Either way, once you know the real reason, then the power lies with you on how you can make doing business with you easier.
- Check your customers credit history — When you’re providing high value, it can be worth checking what your potential customer’s credit history is. That way, you can prevent taking on a customer that pays late, or even worse, not at all.
- Restructure your payment terms — For all new customers you could have a policy where 50% of the invoice is paid upfront with the remaining paid at the completion of your service. This way, you have 50% of the total amount upfront in your bank account.
- Charge penalty fees for late payments — Just as you can incentives early payment, you can use the reverse approach and charge penalties for late payment.
- Shorten your delivery time — Review your process on how you deliver to your customer and identify how this could be made more efficient. The quicker you get the work down (whilst still maintaining quality), the quicker you’ll get paid.
- Shorten your lead time — Review your sales process by first calculating how long it takes to acquire a lead. From initial contact with your business to the time they become a customer. Ways of reducing this number include: skilling up on negotiation techniques, increasing the frequency of touch points and understanding and overcoming common objections and weaving these into your sales process.
- Increase your prices — This can be hard to do, but if you have a good relationship with your customers and are solving their problems through what you offer, then increasing your prices will allow you to serve them at a higher level, give you more breathing room in your business and will actually increase the perceived value of what you offer.
- Value-add to existing customers — By identifying what additional problems your current customers are facing and designing a solution to this problem, you may open up additional income channels from which you can build into your current offerings.
- Fire your worst customers — Those early customers you had got your business of the ground, but they may have become overly demanding and hard to service to the level they expect you too. If they are sucking all your time and aren’t making you money for the business (after expenses), then it may be time to fire them or charge extra to cover their needs.
- Know when to say no — Every opportunity leads to different results,. A high paying customer, whilst looking good on paper, may end up tying down your cash and your time in order to service. And doing so takes away from your regular customer base who pays on time. Bigger is not always better, and a high paying customer doesn’t necessarily lead to making the highest amount of money, once you factor in additional expenses.
- Recognise scope creep — With any project, it’s easy for the customer to keep adding on additional requirements. By reviewing what you’re currently offering versus what was originally agreed upon can lead to gaps. These gaps can either be charged to the customer or absorbed by your business. Nobody likes surprises, so reviewing early and often can help identify when this has happened. Communicating what has happened and setting expectations can help you get paid for the additional service you’ve provided.
- Leasing over buying — For those big purchases, consider leasing over buying it outright. Leasing, whilst more expensive in the long-term, can save money in the short-term, so that you can invest and spend elsewhere. It also lessens the chances of running out of money and requiring on bank loans to finance future investments.
- Negotiate everything — Everything can be negotiated. By taking a review of your suppliers and identifying the ones you have good relationships with, so that you can start a conversation around negotiating a lower rate for on-time or advance payment or that you’ve been a loyal customer of theirs. This can also work with your personal expenses (such as electricity, telephone, internet, regular servicing). You’ll be surprised how much you can save.
- Change suppliers — With new suppliers constantly entering the market, there could be a better suited supplier that you haven’t heard of. It’s worthwhile doing additional research in the market every year. This could be as simple as talking to your accountant, business mentor or others in your industry.
- Buy used equipment instead of buying new — Buying new equipment does look fancy and comes with a warranty, and far less likely to need repairs in the early years, but it comes at a premium. Buying used equipment can save you much needed funds right now. Just be aware of higher repair costs and a lower useful life.
- Review your profit margins — Just because you’re making sales, this doesn’t mean you’re making profit. Talk to a professional who knows what the benchmark profit margins are for your industry and review how you’re going against these benchmarks. A 1–2% saving could be the difference between booming or going bust.
- Remove low-value, high-cost items — Remember that cost has two parts to it, both time and money. Even if it doesn’t cost you a lot to produce, if it’s sucking all your spare time to deliver, this is time that could be used better elsewhere.
- Delay upgrading — Just because a new piece of technology has entered the market, this doesn’t mean you need to buy it straight away. Assess what features you actually need. By delaying upgrading, even by 6 months, can save excess cash being used prematurely.
- Negotiate any loans you have — With interest rates trending downwards, chance are you’re still paying too much. Do your research and see what competitor banks are offering and use this as a guide to what you could be getting with your current bank. By just having the conversation you may save much needed funds now and into the future.
- Minimise personal expenses — If you’re currently drawing money from your business, take a look at what personal expenses can be reduced. The less you take out personally, means more cash in your business to help it grow.
- This article is for information purposes only and should not be construed as professional financial advice.
Now I’d like to hear from you.
Which tip from this post are you going to try first?
Are you going to increase your prices? Or maybe you’ll call your bank and negotiate a better interest rate?
Or maybe I didn’t even mention one of your preferred ways to save or make more cash.
Either way, let me know by leaving a comment below right now.