Cash is undoubtedly the bloodline of every business. Yet research shows that cash flow mismanagement is a crucial reason businesses fail. In the current highly volatile marketplace, it can be challenging for small and medium enterprises to get a firm grip on their cash flow. This blog focuses on the management tips for a profitable business struggling with cash flow fluctuations due to overhead costs.
Cut Costs with Co-working Space
Whether you are a large business looking to cut costs or a small business just starting out, a co-working space like Quest Workspaces can help you cut your overhead costs, such as rent, utility bills, and equipment. Co-working offices allow several businesses to rent space on an as-needed basis where they share the expense of space, making it ideal for companies looking to downsize their expenses. The shared spaces are often built for diversity and easy workflow, providing you with several styles to choose from without needing to customize your building. Shared offices are also already equipped with desks, chairs, filing cabinets, and office equipment. The money you could spend renting an entire floor, equipping it, and servicing office equipment can be plowed back into the business to improve your cash flow.
Leverage Modern Accounting Software
Most of today's accounting software, like QuickBooks, features powerful and intuitive interfaces, meaning you don't have to be an accountant to use it. The software is designed to track all your accounts, transactions, balances, bills, and generate invoices, so you better grip your expenses and understand how much you spend in a given period. The ideal accounting software can also help you better enhance the efficiencies of your cash outflow to ensure more money is retained in your company.
Receive Payment on Time
One of the effective ways to improve your business cash flow is to train your clients to pay on time. You can leverage online invoicing software to send automatic payment reminders to your customers. Additionally, include a one-click payment option to make it easy for your customers to pay you on time.
Adjust Your Inventory
Review your inventory to determine the items not selling well. Deadstock harms your cash flow because the cash you used to obtain them doesn't convert to sales and revenue. You can enhance your cash flow by disposing of the less-frequently purchased products for discounted prices. Similarly, always stock items that sell well to ensure your money returns sooner.
Delay Payment as Much as Possible
Make your payments as late as possible but be careful not to incur a late fee. The later you pay, the longer your cash flow is available, and interest is earned. You can leverage digital banking to set up a direct debit to pay all your recurring expenses on the final day they are due. You should also consider negotiating early payment discounts with suppliers whenever you have positive cash flow. This ensures your cash won't leave your account in large sums, thereby helping you maintain a more stable cash flow.
Lease Equipment
Buying new equipment and maintaining outdated ones can be costly in the short term. Buying equipment can also deplete your cash reserve, leading to unstable cash flows. Leasing equipment can lessen your financial burden and free your cash. Ideally, equipment leases often qualify for tax credits that could lower your tax burden.
Spread Your Expenses
Paying all your expenses on a single day might constrain your cash flow. Spread out your expenses as much as possible to ensure your business always retains adequate cash. Set up automatic payments to track cash flow and check payment options for fixed costs such as liability insurance.
Consider Loan Options
If you need a quick cash injection, consider the loan options available for you. Determine the line of credit, business loan, and other financial options to help your company get money earlier as you wait for the client to pay.
Stabilize Your Company Cash Flow with Quest Workspaces
Healthy cash flow management is an integral strategy that each business owner should master for success. Unfortunately, most businesses struggle to manage their cash flows due to poor planning and runaway overhead costs.
If you are struggling with cash flow issues, co-working spaces such as Quest Workspaces can help you reduce most costs starving your business of cash. Our co-working space solutions are designed to alleviate the financial burden by removing the need to buy or lease offices, allowing your business to retain more cash. Contact us today to learn more.
