From time to time, every small business, even some of the more successful ones, could do with a money makeover. Some of the best alterations you can make in your workplace are operations based, which will help you strengthen your finances over the long term.
Here are some of our top, fairly painless tips (although they could be a bit time consuming) that will help you initiate long lasting and productive changes to your business’ finances.
Alter Your Accounts Receivable System
Timely invoicing and collection of payments is essential to maintain a healthy cash flow. If your invoicing schedule is sporadic or loose, you can expect your payments to be fairly loose and sporadic.
This is why it is important that you implement a uniform billing policy. Your billing policy should include easy to understand payment terms, it should outline your collection process on due invoices, and be uniformly applicable.
Never hesitate from reaching out to your clients or vendors personally to inquire about the status of the unpaid bill. A personal touch can sometimes go a long way in ensuring that a timely bill payment is made.
Get Rid of Obsolete Inventory
Outdated or unused inventory is not just space consuming, it is also money consuming. Carry out an inventory analysis from time to time, so that you can analyse all the items you have stored and don’t expect to sell or use in the next year.
You can sell all of your good inventory at a discounted price or send it back to your vendor. This will help you regulate your cash flow, which will give your bottom line a big boost.
The Implementation of environment friendly practices should not just be considered as a PR strategy or something you do about once every year. It is also a great way to put your business on a strong financial standing over the long term. And the added bonus is that it is usually very simple to execute.
Train your staff to switch off all the equipment at the end of the working day, install energy efficient lighting options, reuse and recycle products to cut down on your expenses.
In order to reduce your expenses further and streamline your entire operations process, you could opt to go paperless. This can be particularly useful when you are receiving or sending invoices.
Buy Used or Lease Instead
Buying new equipment is a good option only if you have access to a lot of funds, which unfortunately most small business owners don’t. You can save some money by choosing to lease equipments instead of buying them.
An added advantage with leasing is that you can choose to upgrade your equipment at comparatively lower costs in the future. This will help free up funds that you can use to manage your business’s day to day operations.
This tactic is especially useful when it comes to computers and office equipment, as technological innovations usually leave them obsolete in a short amount of time.
Re-Negotiate Your Credit Card Processing Fees
Credit card companies have gained considerable infamy for eating away at business revenue. Look for the best and most competitive credit card rates before you consent to a particular card processing fee.
If you are already in a relationship with a credit card provider, try to renegotiate terms based on what is being offered to you by their competitors. This is perhaps one of the easiest and quickest ways to reduce how much your business pays to a credit card company whenever you accept a credit card payment.
Regulate Your Cash Flow
The process of moving money in and out of your business is commonly referred to as cash flow. This is an ongoing process for every business, but the reality is that most business owners think about their cash flow at the end of each month or during tax season.
It is essential that you know how much you are owed and how much you are supposed to pay at the end of each day. By keeping on top of your cash flow, you will be better equipped to deal with unexpected financial situations that force you to spend money that you didn’t intend on spending.
Cash flow problems can severely cripple the functioning of a small business.
If you are dealing with a cash flow problem, you could seek cash flow finance, to help you tide over your current money problems.