Every business needs a healthy volume of cash flow into it. The absence of this cash flow can cause a lasting impact on the business. You must have heard elders suggest you not to chase behind money. But what we feel is; it is okay to be money-minded. But too much of anything is wrong. Here are the 12 best ways to increase cash flow into your business.
1. Do detailed planning
Before deciding to give your customers service, do detailed planning. Consider how much outstanding invoiceswill be healthy for your company. Make a proper strategy and stick to them. If you are not sure about the strategy, then you can contact an accounting outsourcing provider. Discuss your vision with them, and they will help you to achieve your goal.
2. Offer Discounts
Offer discounts to the customers who will pay before the stipulated amount of time. Everyone loves discounts and offers. So, choosing this method might motivate your customers to pay faster.
3. Make detailed reports
Making detailed reports is vital. If you have accurate reports, you will understand how much payment is due. Otherwise, your customer might get away by not paying.
Also, making a report isn’t everything; the reports must be made regularly. Maybe a weekly or monthly report might work. Having trouble making the report? Why not choosing accounting outsourcing firms?
You will get reports that are made by experts in the industry. Also, they will be error-free and will be present at your fingertips.
4. Alert your customers
Customers tend to forget that they need to make a payment. So, as a service provider, it is up to you to alert the customers about their payment much ahead of time.
Alerting a day or two before will not be helpful. You need to notify them about their payment minimum 3-5 days before the date of the payment.
5. ECS is good option.
Yes, this will be a good move for your business if your billing is fixed on certain intervals. Ask your customers if you can get signed form for ECS transfer. If you have their database, it will be easier for you to get the payment. You can directly contact the bank and let them know about the due payment.
In this way, a customer will be saved from your nudging. And you will get the payment on time.
6. Check your billing staff.
This is an excellent place to look into. If your invoicing and billing staff are too harsh, then it will chase your customers away. On the other hand, if they are too light on the invoicing, you will not get any cash flow into your business.
7. Install Software
Invest in some billing software. They will make the invoicing easier, and the process will be much smoother. Also, the efficiency of the software is much more than human beings. They will do all the invoicing for you. And it will be a one-time investment.
8. Give options
Give your customers a lot of payment options. Do not be rigid with one or two options. If you give a lot of options, then the customers will pay faster. Also, it will be easier for your customers to complete the payment.
9. Revise price
It might sound weird to you, but this works. You might think that increasing the price will scare customers away, but it is not correct. If your product or service has the necessity and demand, customers will buy irrespective of the cost. It would be best if you generated that necessity with your potential clients.
If your product costs Rs. 9, then you need to sell 100 items to generate a sale of Rs. 900. And if the price is Rs. 10, then the sale of 90 items will generate the same money. You can give it a try to see if it works for you!
10. Charge a penalty
As a customer, you do not want to pay more than the actual price. Charge your customers with a penalty if they are paying after the deadline of the payment.
In this way, they will try not to pay late, and the cash flow of your business will be consistent.
11. Calculate DSO
DSO or Day Sales Outstanding is an important calculation that every business must do. It calculates the average number of days required for a business to convert credit sales into cash inflow.
The following formula can calculate it:
DSO = Accounts Receivable / Sales × 360
The value of DSO must remain below 30 days. This value will show the number of days it will take to collect your sales. A value below 30 days is healthy for every business.
12. Take help
If your company is not having a healthy cash in-flow and you are not sure where you went wrong, take help. Choose account outsourcing services. These service providers will provide you with a team of experts. The team will be dedicated to your company. You can discuss any financial problems, and they will help you. There state of the art technology and advanced software will become an asset to your company.
You can also choose online accounting services. It will also be a good option for you. Just so, proper research and make sure that the firm is exactly what you are looking for.
Increasing cash flow within a business is not impossible. Follow these 12 steps, and hopefully, you will be successful.
