5 Tips On Keeping Your Small Business In The Black
Posted on 28th January 2022 at 12:43
The primary goal of most small businesses is to turn a profit. However, making more money than you are spending at the end of a year or a quarter isn't the only financial marker you need to be concerned with. According to financial experts, managing your cash flow is more important than profit. These tips can help you stay in the black, presented below by Exec Pro VA.
The first step to managing your cash flow effectively is to keep track of it. There are a variety of software solutions you can utilize to make this process easier. There are even online options that make it possible to check on your cash flow from anywhere you have an internet connection.
Small business owners wear many hats, and you may not be able to dedicate the amount of time necessary to monitor your money. Consider hiring a business consultant to do it for you. Expect to spend between $28 and $98 per hour, depending on the experience and skill set of the consultant. Read online reviews and research how the person you are considering performs on cost and delivery time.
Money that is sitting around in a bank account doing nothing for you can be a wasted opportunity. However, many investments cannot be turned into cash quickly enough to cover cash flow needs. A high-interest savings account makes it possible to maintain liquidity to meet cash flow needs while also earning a return on your money.
Sending invoices out in a timely fashion is one of the best ways to get paid faster. Late or missed payments can be a
major drag on your cash flow. Customers are more likely to pay on time if they receive plenty of advanced notice and get timely payment reminders. Many accounting and customer management software packages integrate invoicing systems that you can take advantage of to speed up and automate this process.
Getting customers to pay early may sound like wishful thinking, but it can be done. One of the best ways to get customers to pay faster is to reward them for doing so. You can offer a gift certificate or discount for making payments before the due date. This can encourage customers to not only pay earlier for what they already purchased but to make additional purchases. Make sure you calculate how much you are spending on incentives and compare it to the value of receiving early payments.
A business line of credit works similarly to a credit card. The difference is that with a credit card, you make purchases and then pay the money back to the credit card company. With a line of credit, you can borrow money against a revolving credit line and then pay that money back. This makes it possible to use your line of credit to cover shortfalls in your cash flow.
A business that has repeated issues with running out of available funds is not likely to be successful in the long run. Implementing these cash flow strategies can help your business avoid problems caused by ineffective cash management strategies.
Exec Pro VA provides skilled and experienced virtual assistants to help business owners stay on track. To learn how we can put our experience to work for you, get in touch with us today.
This article was written by our guest blogger, Amy Collett. To contact Amy or learn more about her business, please visit www.bizwell.org.
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