Optimize your small business’ cash flow
How’s your cash flow? Any small business lives and dies by this variable. Cash is king, as they say. Too often business owners overlook the fact that policies affecting cash flow often are rooted in the overall business strategy. That said, maybe it’s time to revisit yours?
In a typical B2B setting, we invoice and get paid later–sometimes up to 60 days later. The longer you wait to get paid, the longer you have to keep the business afloat via your existing reserves. If you struggle with this, you might consider what your competition is doing. What are their terms? The sooner you get paid, the smoother your operations will run, in theory.
Another technique is to streamline your branding and marketing techniques to send a message out that your quality product or service demands upfront payment. In some cases, customers will associate your brand with high quality, confidence and success. In other cases, customers might be turned off and take their business elsewhere. But this may help you separate the wheat from the chaff. Do you really want to do business with people who don’t value you?
Consider your relationship with key vendors. Do you rely on custom products that are critical to your operations? Then maybe waiting to pay them is not the best strategy. But if that’s not the case, then don’t rush. Waiting 45 to 60 days is pretty standard and likely won’t jeopardize your relationship.
Cash flow issues plague many small businesses–you’re not alone. Know that we’re in your corner and here to help!