1. How to Plan Finances for the Future?
This one's a tough cookie to crack, but believe me, it's the answer to all your cash flow management woes. For starters, if you haven't been updating and recording your accounts clearly and accurately, do that now. You can use your monthly income and expenditure details and past cash flow records to get a likely number of how much you will spend or earn in the coming months.
2. How to Keep the Cash Growing?
One simple way to do it is through putting money in interest earning accounts. If you have to withdraw funds, for example in case of payroll, do it just before payment.
3. How to Deal with Difficult Customers?
In the service business, customer is king, but certain customers can spell a lot of trouble for small business owners when it comes to cash flow management. Payment is one thing that SME businesses face a lot of trouble with customers – the best thing to do is set a policy of payment on receipt of invoice. Don't wait for the end of month to receive payment, and follow up with late payers through timely letters and when all else, phone calls.
4. How to Keep your Vendors Happy?
It's not always possible for an SME business to make early payments to vendors and stay on top of the schedule. However, not doing so can hurt your reputation with them and also result in a poor credit rating. Set up payment cycles, and keep up with the terms regularly to avoid any issues in cash flow management.
5. How can a Small Business Maximise the Cash Inflow?
There are a number of creative ways to increase your cash inflow, without incurring a profit loss. It's all about smart strategy, cash flow management and careful planning in advance.
- Ask for security deposits. This works if you are offering a product or service that is particularly large, expensive or one-of-a-kind, made on order. With security deposits you are much less likely to suffer a loss if the customer decides to walk away and also have cash in advance before you start working.
- Another rule to have is a strict payment schedules. Stick to it and charge extra fees for late payments or modifications after deadlines.
6. What is the Best way to Get Payment for a Small Business?
Consider a subscription-based model for pre-payment. This works if you are offering a regular service and the advantage is that you have a secure cash pool for future costs as well as resource scheduling. You can also add a credit card payment option. This means more convenience to the user and more timely and reliable payments with a regular schedule. Increase the price a bit to make up for the extra charges, and offer discounts to cash paying customers to sweeten the pot for them.
7. How to Reduce Small Business Expenditure?
There is no specific answer to this – different businesses can employ different strategies to limit their cash outflow. Here are a few ideas:
- When buying equipment, consider leasing or choosing used goods instead of new.
- Get into the habit of regular maintenance and repairs, instead of replacement.
- Consider open source software and limit upgrades. Unless it's absolutely necessary, work with open source software that doesn't need frequent upgrades.
- Outsource what can't be done in-house. Instead of hiring permanent employees and spending on salaries as well as training, try outsourcing a number of tasks such as website management or social media marketing to save money.