There is no doubt that a healthy cash flow allows businesses to have more freedom over their operations. More money means that businesses can strengthen their organizations by having more purchasing power. This allows an organization to train their employees or hire more experienced workers, invest in the latest technology, market, and product research, and ultimately grow their business.
Though managing cash flow is no easy task, there are several strategies that businesses can employ to improve their cash flow. Here are a few easy-to-implement business strategies to increase cash flows.
1. Reduce expenditures
Reducing your business’ spending is one of the more obvious ways to increase cash flow. However, it is easier said than done and requires careful analysis. The first step is to analyze the business’s spending to see how much is being spent on electricity, employee bonuses, insurance, and other bills. After analyzing, look for areas where spending can be reduced. Bear in mind that reducing employees’ benefits or pay may impact overall productivity and costs.
2. Consider an MCA or Merchant cash advance
An MCA or Merchant cash advance is a form of funding that allows businesses to obtain finance relatively flexibly. The lender of the MCA or Merchant cash advance provides the customer with a cash advance which it collects back through a percentage of the customer’s card payments using a card terminal.
An MCA or Merchant cash advance is a useful funding source for businesses that use a card terminal. It allows them to obtain finance when they don’t particularly own many assets or have a decent credit score.
3. Offer discounts for prompt payments
Suppose you are looking to increase cash flows, particularly on a short-term basis. In that case, offering cash discounts to your debtors or customers can provide them with an incentive to pay back sooner, which will positively impact your cash flow.
The discount percentage does not have to be substantial either, plus you can try different rates for different customers based on their debts to reach more clients and motivate them to pay back faster.
4. Prepayment rewards
Securing a payment before a transaction may be seen as a liability, but not when it is done right. When they make a prepayment, you can offer your customers a range of rewards, including discounts and complementary products.
These rewards will encourage your customers to keep buying from you while enjoying a healthy cash flow and business expansion.
Cash flow is a company’s bloodline and determines its survival, growth, and success. Hence, creating a customer rewards program can help businesses increase cash flow; thus, it is a great idea. Expanding your customer base by offering discounts, sales, and other special offers is a great way to establish customer loyalty.
In addition, you can also obtain external sources of finance to improve your cash flow, such as an MCA or Merchant cash advance. Try several of these strategies to find what works best for you.
Franklin Merchant Capital has loan specialists that know how to navigate the complicated business loan marketplace, with dozens of prime and alternative lending sources.