Small Businesses Looking to Tools to Improve Their Cash Flow
A crucial component to the success and overall stability of any small business is cash flow. There are several techniques and tools that can help a small business owner improve their company’s cash flow, but some are more suited to all types of businesses than others. With economic uncertainty, more small businesses are now seeking out the tools that are sure to improve their cash flow for the long term.
A New Way to Get Cash Flow
One of the new ways that small businesses are increasing their cash flow and getting the cash that they need right away is through what is known as invoice financing. This is especially helpful to small businesses that are constantly dealing with customers who insist on having longer payment terms, as well as those who habitually do not pay on time.
Put simply, with invoice financing, a business can get the majority of an invoice’s worth in cash and then receive the rest, minus a fee, once the customer finally pays the full amount. This allows the business owner to have the cash necessary to cover the cost of daily operations, without having to worry about going into debt as a result of customers who are not paying on time.
Reminding Customers Automatically
In addition to invoice financing, small business owners are also taking advantage of tools that will integrate right into their existing accounting systems in order to automate payment reminders, as well as late notices. For business owners that are always dealing with customers who pay their bills late, this automated process could ensure that they stay on top of these customers without even having to think about it. Many of these tools also offer the ability to instantly apply fees as well, such as late fees, interest, and credit card processing fees.
Cash Flow Should Be a Company-Wide Priority
Improving cash flow should always be a priority for a small business, as it will help the organization advance itself by always having the necessary funds available to make purchases, pay off bills, and reinvest profits in order to grow. But cash flow should not only be a priority in the accounting department; instead, it needs to be a priority across the entire organization.
Setting targets for employees will keep them motivated to meet their existing and evolving goals, and even a business’s sales department should be involved. Many small businesses are now finding that, if they institute policies that state revenue will be removed from commissions if an invoice is not paid in full or on time, salespeople are willing to work even harder to ensure adequate cash flow.
Outsourcing Is No Longer Frowned Upon
Many small business owners tend to believe that having employees within their organization is better than outsourcing tasks, but the opposite is often the case. Not only will it likely be far less expensive to outsource important work to qualified experts, but small business owners can gain access to professionals who may even be working with a team of other qualified individuals.
Small business owners should be taking a look at their existing staff and determining if there are any employees who are performing any specialized services that could be accomplished more quickly, easily, and affordably with the help of freelance professionals. In order to come to the most accurate conclusion, there are tools and calculators available that will help a small business owner determine exactly how much it costs to keep employees on their staff versus how much it would cost to outsource those tasks only when they are needed.
Super Fast Financing
When a small business owner needs a loan, and needs it fast, going down the traditional route may take far too long and be far too involved. However, there are many services today, such as OnDeck, which is a lender that is backed by Google, that focus on providing small business loans. After business owners apply for a loan, the decision to provide that loan or not will be made within minutes, and funding could be as quick as a single business day. Decisions to provide a loan are often based upon the overall health of a business, rather than on personal credit scores, which can also be extremely beneficial.
As more and more small businesses struggle in today’s tough economy and competitive marketplace, smart business owners are finding ways to effectively improve cash flow. The right strategies and tools will help keep these businesses afloat and allow them to grow over time with greater ease.
Guest Author: Carol Trehearn