Another way to look at the problem of cash flow is in the timing. Most businesses have a window of time between making a sale and receiving payments from customers. During that window of time, a business can lose money.
As a small business owner, you may be paying out more in recurring and one-time expenses than you are bringing in at any point in the month. On paper, it looks like your business is nearly insolvent when really you are just waiting for Accounts Receivable (official customer payments owed) to make their way to your bank account. When customers pay you with a check, you also have that delay before the payment clears. Juggling faster payments to your own suppliers is easy when you use creative cash management strategies. Here are three ways to keep more cash in your business account by changing the way you do business:
1. Use credit card payments more often to conduct business. There are two easy ways to do that. You can accept credit card payments from your customers, such as by setting up a PayPal merchant account, and you can make online payments to suppliers and services with your own company credit card.
2. Invest in an automated billing service. You can find an on-line payment service to get customers their invoices quickly. If you accept e-payments on your company website, customers can even pay you through their bank’s online bill pay service. Or, they can pay you using their own credit card.
3. Create installment payment plans for customers. To keep more cash flowing into your business bank account, accept monthly payments from customers. For example, you can bill for lawn mowing services provided in the summer months at a flat rate per month. So your client can pay $30 a month for 12 months a year instead of $90 a month for 4 months a year of lawn mowing services.
If your customers are families or small businesses, you might be surprised how preferable they would find installment payment plans. Because their monthly cost is lower, customers might even be encouraged to spend more on your products and services.
Read more about how to improve your cash flow with online payments