One of the most important things you can do to help your business grow (and sleep better at night) is to optimally manage your cash flow. Your vendors, contractors, and employees don’t care if you are waiting to get paid by a big client.
Not surprisingly, they just want their money when it was promised.
Carol recently wrote a post for Insight titled “Five Ways to Better Manage Your Cash Flow.” She begins:
“Regardless of the size of your business, how to manage cash flow is one of the biggest challenges that you will face. While revenue and expenses on your income statement give a macro picture of your business, the timing of your cash flow, that is, when you receive payment for goods and services netted against when you must put out actual cash payments for expenses, can tell a whole other story.
So, how do you find ways to get your payments in more quickly and have better control of the payments that you need to make to vendors and suppliers? Making the right technology investments can help. Here are five tips to help you gain better control over your cash flow management, so it doesn’t take over control of your business.
Look to leasing
Whether you have to make technology investments when you bring on new employees, when your current IT becomes out of date or when you need the newest, updated software, putting out big chunks of cash in an irregular fashion can wreak havoc on your cash flow management.
Now, many companies and their technology partners offer the opportunity to lease hardware. This means that you pay small amounts month-to-month, rather than larger payments at irregular times. Knowing these recurring payments with accuracy makes it much easier to plan for them and less likely that you will feel the pain of having to make large additional tech investments.
This can also be done on the software side too, by switching from buying software to transferring to cloud-based subscriptions. As an extra bonus, it also ensures that you are getting the latest and greatest technology by bringing in fresh equipment or the most updated software — that’s a double-win!
Offer terms and incentives
One of the hardest things to do is to get customers to pay their bills. One way to incent your customers to pay early is to offer payment terms, also known as an early payment or prompt payment discount. While you may lose a couple of percentage points off of your top line revenue number, the time, money and stress that you save from trying to track down the payment can be well worth it.”
You can read the rest of the post here.