3 tips to improve your business bank balance
The magic ingredient to help your business grow is the capital to support your growth.
‘Cash flow’ equals delaying outgoing costs long enough to make sure you have enough incoming revenue to pay for them as well as leave a bit for profit. Sometimes finding the sweet spot between ‘cash in’ and ‘cash out’ feels like chasing the pot of gold at the end of a rainbow.
Your profit will build up your capital to invest in growing your business. That’s easier said than done as many businesses have to provide their services long before they receive any income from the work they’ve done.
Here are three tips to help improve cash flow – to give growing businesses the funds and stability to grow.
1. Get paid faster
Not sending invoices out instantly? You need to fix that.
Put it this way: every minute that goes by when an invoice hasn’t been sent to a customer is costing you money. Get your invoicing process under control to improve your business bank balance.
Online accounting software – or an integrated business management solution – gives you the ability to invoice instantly and to convert orders or quotes into invoices at the click of a button. Dashboards showing aged debts make sure that you know who owes you and when it was owed.
2. Reduce stock on hand
Stock costs a business money. If you’re in the business of selling products, this is a necessary expense, but the sweet spot between too much and too little stock is difficult to find. Without the right inventory system in place it can be hard to achieve.
Simple things like setting minimum/maximum stock levels and automatic re-ordering, knowing what sales are coming up, what trends or seasonality changes you need to consider and how they affect your business or even knowing the latest exchange rates can help you to make better purchasing decisions.
A big problem is visibility over stock. Switching to an integrated business solution would allow automation of reordering and ensure stock was always on hand, enabling freeing up capital that can be invested back into the business.
3. Reduce costs and overheads
The most straightforward way to improve your bank balance is to get more cash in, and see less cash out. Reducing operating costs and overheads is a good way to see progress in the profit equation.
Consider these to trim fat from your budget.
- Outsourcing: Outsourcing is a great way to keep your costs down either while growing or when you need to reduce some overheads. Two areas that can be outsourced are IT and administration work.
- Suppliers: If you currently order stock from multiple suppliers, consider locking in with one supplier instead. They will benefit from fixed costs and higher volumes and you will benefit from lower costs and easier to manage relationships.
- Budgeting and forecasting: Make sure that you know what you have to pay when and review your key numbers regularly so that you can spot trends, opportunities or risks. Be realistic about spendings, allocate appropriate resources to projects, monitor performance, improve decision-making, identify problems before they occur – and meet your objectives.
- Systems: Implementing a business management solution often brings planned cost savings from better visibility, reduced administration time, savings from stock management improvements, increased time billing and many more areas.
There are many ways to increase your business bank balance. Some can be implemented straight away; others require the implementation of software or a process change. The ability to increase the amount of funds on hand to help support growth is what will separate your business from your competitors.
Want to find out more?
Is your business growing? For more information about how you can improve your bank balance and inject more profit into growth, contact our Enterprise Solutions team today.