How to improve your business cash flow

Haven Accounting | 3 MIN READ August 23, 2018

Everybody wants to make more money, right? Improving the cash flow of your business is paramount if you want to maximise your profits and minimise your overheads.

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Even if you’ve been running a successful business for quite a while, you should always be looking for ways to improve your cash flow, not only because of tax and inflation factors, but also because you want to keep on top of your finances.

We’ve put together some handy tips on how to improve the overall cash flow of your business to ensure that you have a healthy profit at the end of the day.

Update your payment terms

Do the payment terms you’re currently offering or being offered actually work for your business? What might have worked in the beginning may not be as productive as you’d like now, so it’s a good idea to update these terms to account for any changes such as updates to your supplier’s payment schedule.

Re-evaluate your pricing

Whether you’re offering a product or service, your prices are essentially how you will make money from your endeavours. There’s an interesting psychological perception around pricing that you may well be aware of, but make sure you know who your target consumer is before making any changes. Often if prices are increased, the product or service is perceived to be of higher value – but if your goal is to provide the most affordable service or product for everyday customers then raising the prices may not be the best solution.

Make it easy for customers to pay you

There are many payment methods easily available these days so make sure you’re utilising the one that is going to be easiest for your customers. If you provide a mobile service, it may pay to invest in a handheld EFTPOS machine so payments can be made quickly on the spot. For any online purchasing platforms, using a simple payment method that completes a sale in a matter of minutes is also important. Not only will a fast and easy payment make your customers happy, but it will also ensure that you are getting paid for your services quicker.

Create add-on services

Is there anything that you can offer to your existing customers on top of your current product or service? This can be an easy way to increase profits if you can additionally offer something that is relevant and convenient to your customer. This is often seen across online shopping websites where gift-wrapping can be added for an extra fee.

Actively monitor your cash flow

It should go without saying, but monitoring the money coming in and out of your business is key. There will always be overheads and necessary expenses, but ensuring that you are spending wisely and achieving the best value on these is important. By actively monitoring where your money is going to and coming from, you’ll be able to have a clear view of how to adjust these to maximise your profits and cut down spending where possible.

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