We may be halfway through the first month of 2015, but it is never too late to get on the road to business success. Managing your cash flow properly is a crucial part of running and growing your business. In an ideal world, your business would experience a positive cash flow by both being paid on time for all of the services and goods it provides and increasing marketing efforts to increase clientele.
Whether you experience an ideal world situation or not this year, here are the top five things you can proactively do to help improve your bottom line:
Focus on your invoicing.
Handle your invoicing process with care. By increasing your frequency of invoicing you can increase your payment cycle. Instead of invoicing your clients once a month, consider changing it to bimonthly or even weekly, depending on the volume of invoices per month.
Review your forecast for the year.
As the owner of the business, it is important to be positive about your success, but remember to always be realistic. Work with a financial advisor or your CFO to create an accurate forecast for the year that not only anticipates growth and sales, but takes into account what you will need to do to attain the sales and turn clients into repeat clients. These efforts typically require you to utilize more money: whether in increased staffing to fulfill orders; increased marketing to obtain and kept clients; or increased administrative time to maintain positive client relationships.
Analyze your current and ideal client portfolio.
Whether you are a small business or enterprise-sized company, your clients are the major keys to your cash flow. Reviewing your current client portfolio can be beneficial for several reasons. First, by ranking your customers by profitability and sales volume, you can find who your major players are and when you can expect large volumes of sales throughout the year. Second, you can review their purchases. This will allow you to find sales opportunities to upsell the clients or provide them better solutions compared to what they are currently purchasing.
By creating an ideal client portfolio, you can train your sales team to target potentially new clients who will make the most impact for your business. This can also give direction to your marketing plan for the year to attract those types of clients.
Limit your free trials.
If you are a start-up, you may be spending more to acquire your client than they are paying you for your services or goods. While it is beneficial to offer incentives to obtain free clients, consider at what price you are offering them. Ask yourself: Will you be able to make up these costs by developing the client into a repeat purchaser? Will your clients have increasing needs for your services or goods that will show value in your company over a competitor? While it may be hard to answer these at the start of a client relationship, you should actively document your interactions with every potential client to access their value.
Evaluate your credit terms.
We say this often, but have you evaluated your credit terms this year? Your terms could seriously be hurting your bottom line by encouraging clients to slow pay. Review our credit term blog post to learn how the right credit terms can build a consistent cash flow: http://c2cresourcesblog.com/extending-credit/payment-terms/.