Cash doesn’t always flow how you need it to. It can start from customers who pay late to suppliers who have suffered some kind of setback. Building a cushion in your bank account isn't a complicated concept, instead of having just enough to pay bills and staff it is time to have a larger amount in the account. An amount that will not only allow for timely payments of monthly billings but enough to transfer into savings. Maintaining a smooth cash flow requires juggling many aspects of the business such as staying on top of “pending cash”, also known as accounts receivable, to -
Cash flow is the life of an organization, it’s a means to pay salaries, buy supplies and make stock investments. As the statistics have shown, owners who cannot efficiently manage their business cash flow are almost certain to fail. To improve cash flow and sustain growth it will be important to build a cash cushion. Having cash reserves enables companies to cope with a business disruption, deal with seasonality, and manage slow-paying customers. It allows a business to take advantage of new opportunities should they arise, and plan for future growth by having investment capital available.
Here are just a few tips on how to business owners can boost their cash flow:
The efforts to implementing meaningful changes within the business will be a combination of lessons learned. Building and keeping an adequate accumulation of cash provides maximum opportunity and flexibility to any business.
Fontenot & Associates Solutions, LLC recommends identifying the method or strategies which work for your business culture. Building a stable business for long term means having sufficient liquidity and a developed and executed form of policy and procedures with clear defined goals.
It goes without saying that working with numbers and understanding how to interpret them, is a key part to managing a business.
When you sell a product or service and generate a dollar of revenue, that economic exchange is captured through either the receipt of cash or through selling “on account”. When you sell “on account”, you create Accounts Receivable which is revenue earned, but not yet collected in cash.
If you think about it, you have actually used Accounts Receivable your whole life. If you’ve ever earned a paycheck, you’ve used accounts receivable: just think, you performed work for your employer and you were paid, most likely, weekly or twice a month. You have performed work for your employer and weekly or twice a month, you are waiting to be paid for those services performed.
When in business, at a high-level Accounts Receivable is important because it affects your cash flow. It matters because it is always important to keep inflow greater than you outflow, but Accounts Receivable is sort of part a no man’s land between inflow and outflow. This is why, in the beginning of starting a business and definitely before making sales “on account”, the terms of repayment need to be outlined and explained to your customers. The typical payment cycle for goods or services ranges 30 to 90 days.
Accounts Receivable should be best managed on a consistent and routine basis. Regardless of your software or system, a process should be developed and implemented to ensure timely payments is the business overall expectation. This expectation should be known not only by customers but your support team as well.
Inconsistent and spotty attention to the task can starve a businesses’ growth, while a steady and smooth process results in a business foundation capable of achieving all of its goals.
Has this aspect of your business become overwhelming? Would you like to develop a new Accounts Receivable policy? Schedule a free consultation with us.
Acquiring new customers is expensive and time-consuming. As a matter of fact, research shows that attracting new customers is 5X more expensive than keeping your existing customers. One of the most effective ways to increase your revenue is to invest more time with your existing customers.
In the early stages of building your business, you use marketing to attract new customers. Once you land a steady flow of customers, your work has just begun. As a small business owner, you need to keep customers coming back. This is why marketing to existing customers is essential for your small business.
Don’t let customer relationships fizzle out after the first sale. We have identified four methods you can use to invest more into your existing customers and to help keep them coming back.
Tip 1: Stay in Contact
Most of the time, your customers are not at your business. It’s important to stay visible by building brand awareness and marketing when you customers are not around.
Tip 2: Address customer needs
When you operate as a small business, you have an advantage over the larger corporations by offering a personal experience. What problems can your business solve for existing customers?
Find out what the customer expects as soon as possible. Ask open-ended questions during your earliest conversations and listen to understand customer perception. Open-ended questions are those that require something more than just a simple "yes" or "no" in response.
Tip 3: Collect data
Data is gold when it comes to marketing to existing customers. You can use data to personalize marketing strategies for current customers.
Find out your customers’ opinions by collecting feedback. For example, you could send a follow up email to a customer to ask if they are satisfied with your product or service. Have a place where customers can submit feedback. Also, set up a process to let customers know how you fill use feedback.
Tip 4: Set up a loyalty program
A loyalty program rewards existing customers for returning to your business. Creating a loyalty program also connects customers to your business.
A loyalty program rewards customers for buying from your business. Set up a loyalty program for your business to encourage customers to keep coming back. Since they draw current customers back to your business, loyalty programs increase your revenue while rewarding customers.
These are just a few tips on how to get more revenue from your existing customers. By implementing these simple tips, you will soon see opportunities to develop or enhance your customer service policies and procedures. The best part about the process is that your customers will benefit and feel that they are appreciated.
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