Here are six easy to implement business strategies that will increase your cash flow and get you on the fast track to higher profits.
1. Reduce your spending.
Decreasing your spending is one of the more obvious ways to increase your cash flow. Of course, this is easier said than done. But even a few minor reductions can result in major returns.
The first step to implementing this strategy is to carefully analyze all of your spending. How much do your office supplies and electrical bills cost every month? How much do you pay for insurance, employee salaries, and other bills? After analyzing your spending, look for areas that can be reduced. However, it’s important to approach spending cuts carefully, because pay cuts can result in driving away employees.
2. Create additional revenue streams.
One smart way to tap into a new revenue stream and increase cash flow is Central Bank’s Commercial Payments solution. This powerful and automated Accounts Payable (AP) system will streamline your current payment process into a faster, more efficient payment system that requires less management — saving you more money and time. And because Commercial Payments is credit card based, Central Bank will pay you a revenue share, or cash back, on every dollar of digital payments processed through the system.
3. Offer discounts for fast payments.
If you’re looking for a way to encourage your customers to pay their invoices or bills faster to increase your cash flow, then fast pay discounts may help. The discount doesn’t have to be substantial, but customers will appreciate a small amount of savings if they pay within 30 days or less. Try several incentive plans, with different discount levels, to reach more clients and collect payments faster. Also, making it easier for customers to pay will increase the well-being of your business. Consider a payments and invoicing solution, like Autobooks, to streamline your payment acceptance.
You can also approach your vendors and offer this same incentive when you pay them faster through Central Bank’s Commercial Payments automated payment system. Be sure to explore this opportunity to negotiate a discount incentive by paying your vendor sooner, or even before the due date.
4. Watch your inventory.
Are you investing a large portion of your cash into inventory? Inventory may be the lifeline of your business, but you don’t want it to destroy your cash flow. The boxes of shirts, candles, or other items you sell shouldn’t sit in warehouses for decades. It’s important to find a balance between having too much and too little of inventory, find the fine line that is just enough to satisfy your customers’ needs.
5. Consider raising your prices.
Are you keeping up with inflation? You might be able to raise prices on your products and services to keep up with the market. Higher prices can lead to more cash flow, but they may also scare away customers. Find the happy-medium that fulfills your cash flow needs, but also stays within a prince range that keeps your customers happy and loyal.
6. Offer prepayment rewards.
By offering a variety of rewards ranging from discounts to extra products, you can incentivize your customers to prepay a portion, or their entire bill, up front. You can also create a special rewards program with gift cards or other items. Customers who prepay for large packages, services, or multiple items could receive extra rewards. These rewards will encourage them to stay and continue buying your products or services.
Cash is King in every business. And cash flow is your company’s life blood. So creating a customer rewards program that increases cash flow is always a smart idea. By offering sales, discounts, and other special rewards, you can expand your customer base and gain loyalty to your business. Plus automating and streamlining your current AP process with Central Bank’s Commercial Payments solution can make it even easier. Incorporate several of these strategies into your business operations to discover what works best for you.
Stop by any Central Bank location to find out how Commercial Payments can make your Accounts Payable system more efficient and profitable.