Cash is the lifeblood of your business. Without sufficient cash flow, you risk not being able to meet obligations such as bills and payroll. Nor can you focus on actions to spur growth such as investing in inventory, upgrading equipment or hiring new employees. Every business needs to look for ways to manage cash flow. The following are four simple strategies to help you solve your cash flow difficulties once and for all.
1. Let Your Money Earn Interest
If you’re not using cash, you may as well let it earn interest. It’s always a good idea to invest any spare cash into accounts that earn interest. If you can survive without the cash for some time, consider investing in money market accounts, which yield higher interest than savings accounts. You can also research other investment options. However, it’s important to keep liquidity in mind. If you can’t access your cash, it’s not going to be there when you need it.
2. Negotiate Contracts with Suppliers
If you have long-term relationships with service providers and suppliers, you may be able to negotiate better terms. If you’ve been a trustworthy partner with these companies, they certainly don’t want to lose your business. Even relatively small bills add up. If you can get a better deal, you’ll have extra cash you can use to reinvest in your business. You have nothing to lose by negotiating.
3. Turn Unused Assets into Cash
Do you have space or equipment that you’re not currently using? You may be able to help your cash flow situation by selling or leasing these out. For example, if you have extra space another business may want to rent it out for an office.
You could sell any supplies or equipment that you’re not using. If you’ve upgraded your computer system, for example, you may as well sell the old equipment. You can find buyers using your contacts in the industry. There may also be specialty auctions where you can sell certain types of items or equipment. There are, for example, auctions for office furniture, electronics and restaurant supplies. It’s important to have working capital for your business.
4. Invoice Factoring
Out of all the potential cash flow solutions available to businesses, invoice factoring might be the most powerful. Many businesses have clients that are slow to pay their invoices. Even when they pay on time, you have to wait weeks before you get the cash. When you factor your invoices, you get immediate cash from the factoring company. This type of financing has some key advantages over more conventional approaches such as bank loans. To obtain a loan, you usually need an established history and strong credit. Even startups are eligible for invoice factoring. Since the factor purchases your invoices, they’re more concerned about your customers’ credit history than yours. Furthermore, you don’t take on any debt when you factor your invoices. You get cash up front and let the factor collect payment from your customers.
All of the above techniques can help you improve cash flow for your business. If you’re looking for the quickest solution, however, it’s hard to beat invoice factoring. If you want to find out how you can get approved and start collecting payment for your invoices within days, contact Riviera Finance today!