However, a lack of proper control over finances and neglect of cash flow often creates a cash crunch and eventually crippling small businesses. As a small business owner, you should think of revitalizing your cash flow by regularizing your cash influx. Turn your cash flow into a surging pool by following these simple tricks.
Three tricks to Increase Cash Flow
1. Ask for advance payment at least in part.
A good way to manage your cash flow and ensure that you have a steady supply of ready cash is to ask for payment prior to delivery. You can divide the total payment into parts if your delivery is spaced out and then ask for 50% advance on each part prior to every service delivery. That way, your customers will also feel comfortable about the payment arrangement. You can incentivise your customers by offering them a 2% discount on advance payment. Lots of customers will grab the deal.
2. Avoid paying late fees by always paying your dues on time.
Even if the monthly late fee is as low as Rs 100, add it up over several years and then calculate the interest on the amount, and you will see the difference. Also avoid making very early payments as it makes no sense to let go of cash early and disrupting your cash flow balance. Make early payments only if the supplier gives you discounts.
3. Make frequent trips to the bank and deposit money as soon as you realize due payments.
Any cash lying around the office/home is sure to get spent in some way or the other. Use the bank teller counter so you can get an itemized receipt of your deposits. Now, maintain these receipts in a file and you will have a ready made cash inflow statement.
You should always hire a financial advisor if you are not particularly adept with cash flow management.