Simple ways to maximise your cash flow
Cash flow is subject to seasonal changes and many outside factors beyond your control, but there are small but effective ways you can give it a little boost with the correct management skills. One of the most important skills to have as a small business owner is identifying opportunities to maximise cash flow through careful organisational skills that ensures your cash is utilised in the most efficient and productive way possible at the right time.
Aside from knowing the due date of payments, it’s good practice to familiarise yourself with any payment discounts that come with early payments or payments made in cash. If these are offered, take advantage of them so you can use the amount saved more productively – whether it goes into production or campaigning, the discount will chip off some of the costs that will eventually add up.
Keep in mind that if there aren’t any discounts for early or cash payments, be cautious of when you pay your creditors. Always pay on time, but this doesn’t necessarily mean you have to pay early when the money might be better utilised prior to that time. There may be last minute expenses or opportunities that need to be addressed – but if the money has been withdrawn from your cash flow prematurely, you may lose these opportunities.
Conversely, you can also review at accounts receivable to see how you can maximise cash flow at every opportunity. A simple strategy such as setting up a regular payment schedule from customers and debtors means that you will have a constant income stream. If you have the means to, you can also offer discounts for early or cash payments. If you see an opportunity – take it. By offering an incentive for early payment you can get access to cash earlier and have more freedom to move.