Commercial Services: 6 Ways to Improve Cash Management
10/04/2023
The foundation of intelligent business management is maintaining liquidity during times of uncertainty in the financial market. You want to have a reliable source of funds should you want or need to be prepared for changing opportunities.
If you run a small business and regularly deal with restricted cash flow, now is the time to review some basic steps to get things moving again.
1. Invoice immediately:
As soon as the job’s complete, send the bill. Consider asking for upfront deposits or partial payments if your business undertakes long, complicated, or expensive projects.
2. Incentivize prompt payments:
Make it clear when payments are due and offer a small discount for quick payments—for example, 2 percent off if paid within 14 days.
3. Pay bills when due:
Don’t pay your bills sooner than required. Check when bills are due and schedule payments accordingly to keep your cash on hand for as long as possible.
4. Check your customers’ credit:
Don’t risk taking on clients with a long history of making late payments (or not making payments at all). Be proactive in conducting credit checks to feel confident your clients will pay you promptly.
5. Evaluate your inventory regularly:
It costs money to store products that aren’t selling – and it can also cost you not to have the products readily available that your customers want. Analyze inventory and purchase trends regularly to meet demand (without undue surplus).
6. Cooperate with similar companies:
You probably don’t want to partner with direct competitors. But if you can find similar companies who use some of the same supplies as you (but ultimately sell different products), consider asking them to make combined purchases from suppliers. That way, you’ll both benefit from bulk pricing.
