Here are 10 smart ways in which you can increase the cash flow of your business.
- Master marketing – Very often marketing absorbs vital cash flow before we realise that we have wasted too much. Think about business partnerships than upfront digital marketing.
- Master sales channels – Research (and power law) suggests most of the sales come from one or two channels. Double down on the channel that is working helps cash flow as well as contribute towards growth capital
- Customer invoices – What steps can you take to invoice customers before you have even started the work? With the advent of subscription pricing, this is becoming more common.
- Invoice frequency – If the total amount that the customer pays is perceived as high, you can increase the frequency of payments so that cost range becomes acceptable.
- Just-in-time inventory – A lean inventory cycle frees up cash. You will save a lot of cash if inventory is not sitting up in shelves and is used in other areas of the assembly line.
- Reliance on variable costs – If the costs are fixed, well they are.. a fixed high expenditure. It reduces your options to pivot. If you build a business around variable costs (think subscription), you increase your optionality.
- Subscription structure – Let me make a statement. There are parts of your business that can be converted into a subscription model. Subscription model is the darling for investors too.
- Recurring contracts – Customers paying contractual obligations to use products and services again bring predictability to cash flows. Can your product / service be moved to a recurring usage instead of a one time usage?
- Customer focused – Focus on customers help bring certain other services / products in the value chain which were not included earlier. A focus on customer helps us keep our eye on the problems they face.
- Payment options and convenience – There should be no inconvenience when the customers are paying you. Period. With the number of payment channels in place today, it is a no brainer to include both credit card and debit card options.
As you grow and scale, using these opportunities to improve cash flow will bring long-term sustainability and resilience in your organisation.