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5 tips on getting cash into your business
Cash is King, Revenue is Vanity – This is a well-known adage in the business world, and for good reason. While revenue is important, it’s not much use if it doesn’t make it into your bank account.
As a business owner, it’s crucial to have a solid cash management strategy in place to ensure that your are getting cash into your business.
Getting cash into your business
Here are five tips to help you with getting cash into your business and better managing it across your business process.
1. Establish clear payment terms
Make sure that you have clear payment terms in your terms and conditions. This includes setting payment deadlines, late fees, and credit policies. Having these in place from the start will help prevent late payments and ensure that you are getting cash into your business. Remember, you are not a bank for your clients.
2. Use your finance software to its full potential
Often clients are simply not across how they are performing in terms of cashflow until there is a sudden panic to pay salaries and an urgent call goes to the bank. As a business owner setting up basic processes and reporting in your financial software, will ensure that you know what is happening with your cash i.e. set up your cashflow snapshot – what the forecast for cash looks like now and into the future based on sales and expenses (ensure that you include likely tax payments too); and set up automated reminder messages to clients who are late with payments – this removes the need for you to remember to follow up, it removes the awkwardness of directly asking for payment via the phone or personal email, and a gentle nudge is often all that is needed to get outstanding bills paid.
3. Review all business processes regularly
To improve cash flow conversion, business owners should examine all business processes, including marketing and sales, manufacturing and inventory, delivery, and invoicing, with an eye to reducing lead time, minimising the risk of over-stocking, extending payment terms with suppliers, being clear on payment terms with clients, and focusing on targeted campaigns and activities that deliver tangible qualified leads and sales conversion results.
4. Revisit your revenue increase and expense reduction opportunities
Is your revenue where it needs to be? If not, we need to know why not. With the help of a business strategist you can quickly determine how to bring in more revenue through reviewing client wants and needs, expanding into new markets, revising or diversifying your product or services, and/or improving customer awareness or their experience.
Similarly, when did you last look at where expenses could be reduced? Look into discretionary spending and where possible, negotiate with vendors for better terms. If needed, prioritise payments, ensuring that those critical to the business performance are paid first.
5. Leverage cash
Maximise the value of your cash by investing in growth opportunities, diversifying investments, taking advantage of tax-saving opportunities, paying off debt, increasing working capital and increasing cash flow.
Cash management is an essential part of running a successful business. By implementing these five tips, you can ensure that you are getting cash into your business and that you’re using it to its fullest potential. Remember, revenue is vanity, but cash is king. By focusing on cash management, you’ll be better positioned to weather any financial challenges that may come your way.
Not sure how to best implement these tips? Reach out to the business strategists and business coaches at Two Tides to equip you with the ‘know how.’
Schedule a call with us today.