Published: May 4, 2020
As a business owner, you have more power with a little cash in hand.
Having a healthy business bank balance means you can:
- Purchase equipment and other assets to grow your business
- Finance expansions to production capacity
- Developing and marketing new products
- Entering new markets and take on new business opportunities
- Pay for the day to day running of the business
- Cover emergency expenses
- Pay all your invoices and wages on time
Sounds pretty good, right?
Hopefully these cash flow tips will help you have more money at your disposal. Let’s get into how to improve your business bank balance.
This may seem like an obvious tip, but the truth is that a lot of businesses struggle with late payments.
Getting paid faster will greatly improve your cash flow, so don’t take your late invoices lightly.
There are a few steps you should take to speed up your invoices:
- Make your invoices as easy to pay as possible.
- Set payment terms that both parties agree on.
- Set up a system to remind customers to pay their late invoices.
- Offer incentives for on time payments, such as a small discount.
- Improve your debt recovery process, so you don’t let money get away from you.
Getting your clients to pay you faster can be tricky, but you will notice a big improvement in your business bank balance.
If your business holds stock, you are likely in one of two camps: those that don’t hold much stock but often run out, or those that carry lots of stock but tie up all their capital.
It is important to make sure you find a good middle ground, so you can successfully fill purchase orders while also having money available to grow your business.
Knowing how much stock you should hold is all about knowing your business and your marketing.
This starts with having a system for tracking your current stock levels, so you know when an item needs to be replenished and you can identify your best sellers.
Once you have a general idea, simple things like knowing what sales are coming up, what trends or seasonality changes are coming up and setting minimum/maximum stock levels and automatic re-ordering can help you make better purchasing decisions.
Not tying too much of your capital into stock will help you improve your business bank balance.
Check out this article: How Much Inventory Should My Small Business Hold
Your business bank account being empty could be a sign that you are simply spending too much.
Review your expenses carefully, and if you can’t find any areas where you can cut back, consider seeking the advice of an expert.
You might be able to save money in ways you wouldn’t expect, like renegotiating the cost of your lease or investing in new technology.
Having a budget will make it easier to know what expenses are necessary and where you can make cutbacks.
If you are interested in reducing your business expenses and creating a business budget, book a session with our friendly team and we’ll help you find some savings.
If you are struggling with getting enough funds for your business, it might be worth living more frugally with your own money. Check out our simple money saving tips.
Your margins are the difference between the direct costs of sale in your business, and the price that you charge.
This reflects the amount of gross profit you can expect to make per sale, so making a small increase in your sales unit price won’t make much of a difference if your margins are very low. You might look at increasing volume. If you have low volumes and a reasonable margin, the increase in sales price will immediately benefit you.
Once you have cut back on your direct expenses, your margins should naturally improve. However, it is important to make sure that you are tracking them properly and continuing to find ways to improve them.
Measuring your margins may sound simple, but most business aren’t set up to measure their margins properly and really don’t know their break-even point.
If expenses such as these aren’t properly accounted for, then your margins may look good on paper, but your business bank account can tell a totally different story.
Take a look at these steps to improve your business margin.
If you are struggling to lower your costs and your hard earned sales aren’t improving your business bank balance, book a free consultation with our business advisors.
Holding a sale can help you boost sales and get some more cash in hand, although it isn’t a long-term solution.
A sale can be a great way to get rid of old or excess stock, get some cash to pay upcoming expenses, potentially gain some new loyal customers and create positive word of mouth.
Bringing customers to your business with a sale can also allow for upselling. Some of your full price items may end up alongside your discounted items in the shopping cart.
Be careful though, you don’t want to get your customers to expect a discount and discourage them from buying full price items.
If there is a discount you can give that lets you remain profitable or work towards a long-term business goal, it could be a great way to put some extra cash in your business bank account.
Hanging on to obsolete stock because you cannot make the margin you want, is not always a good idea. Bite the bullet and get rid of stock at cost and free up that cash flow.
If you need money, you can apply for a business loan. The expression “it takes money to make money” can definitely be true in some cases, and a well thought out loan now could lead to a healthier business bank account down the line.
Generating revenue is the best way to improve your business bank balance, so you should focus on growing your business long term.
Getting a business loan can help you with increased working capital, vehicles, new equipment, renovations, debt consolidation and anything else that will help you grow your business.
There are plenty of ways to grow your business. If you are interested in working towards improving your business bank balance and achieving your business goals, we can help.
Book a free, no obligation consultation to talk to one of our experts about your business!