What's the key to having a successful and long-standing business? Does it involve having a revolutionary product or idea? Possessing specialized expertise to offer a needed service? While those things are important, the most critical factor that contributes to business success is how well you manage your cash flow.
Yes, cash flow really is king. You can have the most innovative product on the market or be the most experienced service provider in your area, but if you can't manage the money that flows in and out of your business, your business won't be successful — or be around for long.
Here are seven ways you can boost your cash flow — and your chances of business success.
- Expedite receivables. The money you make is key to controlling your cash flow, but if that money isn't collected in a timely manner, you may have trouble meeting your expenses. The most successful business owners understand the importance of expediting receivables and have solutions to encourage prompter payments. They may, for example, offer shorter payment terms — say 30 days versus 60 days. Or, they may institute late fees, or offer discounts to customers who pay early. Also, Consider Accounts Receivable Financing. It’s a popular option for businesses that want to accelerate cash flow. In fact, many financially sound, small- to mid-sized businesses find AR Financing to be a great tool for growth and choose it over more traditional forms of credit because of the flexibility it provides. If you would like to learn more, call Mission Valley Bank's AR Specialists, Steve Nunez or Janet Shinkle at (661) 753-5681.
- Accept credit/debit card payments. Another way to encourage payment from your customers is to give them the flexibility to pay with debit or credit cards. If you sell goods and services, you may find that customers actually spend more money when they can pay by card.
- Understand your cash flow. The best way to work on your cash flow is to understand how it varies throughout the year. For example, your business may be more seasonal and you may have periods when your cash flow is tighter. Understanding the nature of your cash flow makes it easier to plan for your business.
- Enroll in online and mobile banking. You should know your cash position at all times. Services like online and mobile banking will help you stay on top of your account balances and transactions.
- Get a line of credit. If you have seasonal cash flow, a line of credit will allow you to meet expenses during slower times. With a line of credit, you can borrow and repay funds over and again, and will pay interest only on the amount you borrow.
- Maximize excess funds. If you have an excess of cash flow, it's important to put it to work for you by saving or by paying down loans.
- Lease equipment/technology. If your business requires certain technology or equipment, consider leasing versus purchasing. With leasing, you don't have to make a large initial cash outlay, which will free up your available cash.
Let us help you successfully manage your cash flow.
For more information on ways to manage your business cash flow, talk to a business banker today.