Cashflow is one of the most important critical success factors for your business. You need to optimize your cash flow and this does not necessarily imply increasing your revenue. Some of the factors that will help you to keep your business afloat include earning interests on your accounts, speeding up invoicing and cutting on costs. Here are some of the techniques that will help you to boost your cash flow.
- Reevaluate & Fine-tune Your Pricing Policy
There is a possibility that you have either set very high or low prices for your products. Test and find out what your customers can bear before you change the pricing of your goods or services. The mistake that most people make is coming up with preconceived conclusions without looking for supportive data. The perceived value of your products tends to change with the changes in prices. The perceived value of your products tends to increase when you rose your prices. In addition, some customers may not take you seriously when you set your prices too low. Therefore, you can take advantage of your pricing policy to improve your cash flow.
- Replace Old Inventory and Equipment
Old equipment is inefficient and occupies a lot of space. For instance, printing deices get outdated quickly and become incompatible with the modern technology. Most companies are shifting towards laptops and desktops to the use of mobile devices and the replacement process can be quite frustrating. It is quite costly to repair, maintain, and manage multiple models and brands. You also have to train your team on how to use and maintain the new equipment. It can be cheaper to lease devices and introduce the latest technology to your company. New machines tend to be more power efficient and hence you will save a lot of money in the long run. Its one of the best ways to improve your cashflow.
- Re-negotiate Your Long-term Contracts
Are you in any long term contracts with your service providers or suppliers? Most entrepreneurs use this tool to make sure that their businesses run smoothly. Did you know that even those small business expenses can accumulate over time and you will find yourself paying for dozens of subscriptions? Try to renegotiate these contracts with the suppliers that you have developed a rapport with. In case you are not comfortable with the current terms, approach your suppliers with a new and more cost effective payment arrangement. Its not good to delay payments if you already have an existing contract. Most of these companies will be willing to accept the new arrangement as long as you have had an excellent working relationship.
- Create Incentives and Penalties for Early and late Payments Respectively
Most companies will tell you that invoicing is an extremely painful process. An excellent reward system will help you keep your clients accountable. An incentive and penalty program can help you to improve your cashflow. There are thousands of choices out there and this exclusively depends on your industry and target audience.
- Improve on Your Marketing
You can improve your cashflow by enhancing your marketing efforts. Improving marketing will significantly reduce your cost per lead and hence boost the lifetime value of your clients and also open up the markets that have not been tapped. Implementing an efficient content marketing initiative will help you to gain credibility and foster trust with your clients. In case you have an interest in upselling and you are not sure of the products that you need to create, do some customer survey.
In case you have a problem with your cashflow, honestly evaluate you business and how you are running it. You need to tweak and monitor your business infrastructure on a regular basis. Be keen with how you allocate your monetary resources and think about the most effective changes that you can make.