In order to have a successful business, your business has to be making money. Not only this, but you also have to use that money to the best advantage of your company, meaning that you’re paying off your debts, investing where you can, and truly making the most of the finances you’re bringing in. But when money is tight, doing even the most basic business tasks can be challenging. So to help organizations currently in this situation, here are three tips that just might help your business to better manage its cash flow.
Require Deposits On Bigger Orders
Especially if you’re still a fledgling business, you likely need some type of prepayment on your orders so you can afford to actually go forward with production. And while you might feel like this is asking a lot of your customers, Michael Lewis, a contributor to Money Crashers, recommends that you require these type of deposits if you want to be able to have the cash flow you need. By asking for something like 50 percent of the total order price when you have a large or expensive order, you can ensure that you’ll have the funding you need to take care of the production as well as give yourself some insurance on the chance that something happens with the customer not wanting to pay for their order anymore.
Know and Work With Your Seasonality
For some businesses, there are certain seasons or times of the year where they’re busier than usual. While these busy times can be great for your cash flow, it often also means that you’ll have slower times to come. So to help you find a way to make it through each of these cycles, Lisa Stevens, a contributor to Entrepreneur.com, advises that you learn and work with any seasonality your business may have. Try not to over-project or under-project how you’ll do in the upcoming seasons so you’ll be able to always have the funds you need to keep your business open.
Get The Time You Need For Payables
If you’ve figured out how to bring in the cash you need, it’s now time to ensure that you’re not having to pay it out sooner than you’re able to. To address this issue, Intuit Quickbooks advises that you try to extend your payables as much as you can. If you’re able to get something as a net-60 or net-90, always choose to go with the longest amount of time. This will help give you the flexibility you need to keep your cash flow in the positive and use the money you do have on hand to further your business plans.
If your business is struggling with cash flow, consider using the tips mentioned above to help you learn how you can combat these issues.