4 Ways To Boost Your SME’s Cash Flows In 2023
For small business owners, ensuring enough money is coming in to operate is the biggest issue most will face.
Getting a good grasp of your business’s cash flow situation will help put you in a strong financial position as we head into 2023.
Here are four ways to boost your SME cash flows:
Increase your sales
While all businesses strive to increase their annual sales figures, there are some creative approaches you can take to help boost both their price and volume.
It’s always worth testing different price points on your products and services to determine how high they can go before they start to impact customer demand. Another approach is to offer bundles, where you package up multiple offerings to increase your volume and overall revenues. Just be sure to calculate your pricing correctly so you’re not inadvertently hurting your cash flow situation.
Another option worth considering is using a subscription model to generate regular income.
If you need cash coming into your business as soon as possible, it’s important that you send invoices as soon as you can. There is always going to be a lag between the time you complete work or purchase products and the time you are actually paid.
By following the lifecycle of money through your business, you can determine the best way to invoice and boost your cash flows.
It’s also worth regularly following up with customers who don’t pay on time to make sure they are aware of the issue.
Review payment terms with suppliers
While you want your money coming in as fast as possible, you also want to be paying your suppliers as slowly as possible.
If you are able to adjust your payment terms by even one week, you might find that your cash flow situation dramatically improves. Talk to your suppliers and see if they can offer more favourable terms.
Work with lenders
All small businesses should be working closely with a finance broker to help compare their options and build relationships with lenders.
Lenders have a host of products that are predominately used to improve your cash flow situation. These include invoice and equipment financing, lines of credit and short-term loans.
Brokers can also compare interest rates and fees and point you toward lenders currently in a position to offer finance. Meet with your broker regularly to continually review your cash flow situation.