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How to Manage and Increase your Small Business Cash Flow


Sales are important; however, cash flow is the lifeblood of any business. It is very important to a small business to keep money coming in regularly in order to pay salaries, buy materials and to keep the business running. A lot of small businesses start finding issues when it comes to cash flow and they are sometimes to forced to slow their growth because they lack the proper strategies when managing their inflow and outflow of cash. Here are some methods on how to increase your small businesses cash flow.

 

Penalty for Late Payments

By enforcing penalties for late payments will give the customer an incentive to pay earlier, as they want to avoid the penalty. If they are late then it earns you supplemental income for the time that the payment was missed.

 

Layaway Program

Layaway used to be popular due to the rise in personal credit cards and it has now started to be popular again. A layaway program will allow your customer to select a specific product and then split the payments over a period of time. There will be a date where the item is paid in full and once it is it will be delivered to the customer. By doing this you won’t be stuck on waiting your money.

 

Deposits on Custom or Big Orders

Deposits are vital, especially for custom order. If you think you’d struggle to sell the custom item to anyone else, then you will probably lose money if the customer cancels. A deposit will stop the client from walking away and it also helps you receive money even if the customer cancels.

 

Sell Old Inventory

If you have some extra or old inventory, start selling it. It is taking up space which is costing you money in the long run.

 

Utilise Factoring Services

Factoring involves a third-party or a non-bank-finance company. One of the benefits of factoring is that the credit risk of the accounts receivable is purchased by the third party. This allows a small business to keep a consistent cash flow whenever they need to.

Added: 28 Feb 2019 16:16


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