Success is often defined by how much money a company can make.
That is rule number one in the business handbook and one that is impossible to sidestep.
Even if your values differ from that opinion, you will find it almost impossible to convince the rest of the business fraternity.
Money makes business, and the world, go around, which is why it is always important to have plenty of it.
However, that is easier said than done, especially for small businesses Small businesses tend to struggle to make money at the beginning, which puts them in a difficult position.
It is no coincidence that the majority of small businesses go bust within the first year.
So, if you are a small business, what can you do to make sure you have the cash?
Keep Up To Date With Received Payments
It is amazing how many companies let their clients pay them late or have to chase them for payment.
Okay, it is hard to make a stubborn client pay if they don’t want to, but you shouldn’t give them the leeway in the first place.
Always check your account for payments received to make sure they pay on time, and if they don’t give them a call to let them know it is not acceptable.
By creating a culture of punctuality, you are giving yourself the best chance of survival. What happens if they pay late, and you cannot afford to make an existing payment?
The fines and the bad reputation could cripple your business.
Pay On Time
Now that you know how important paying on time is heed your advice! If you are paying a client, it might be too costly. But, if you have to pay the bank they could put fines on your account.
One fine is nothing, but an abundance of fines will add up and hurt you in the long run.
You can’t run from the bank forever.
Hire An Accountant
It sounds like another expenditure that is going to cost, but in reality it will save you a lot of money. And, saving money means you have money left to spare that you can spend.
Accountants are professionals who know the business industry inside and out.
Consequently, they know where you can save money and cut your expenditures. For example, a good accountant will always focus on tax because there tends to be tax relief for small businesses.
It is all legal, so there is nothing untoward with the practice. Businesses don’t usually do it because they don’t have the knowledge in the first place.
Consequently, that is where an accountant flexes their muscles.
Create Financial Reports
Maybe you cannot afford an accountant on any basis at this point? Well, that is not the end of the world because you can always do your bookkeeping.
If you do have some accounting knowledge, no matter how basic, you should start creating financial reports on a regular basis. Financial reports are easy to do; just balance the incomings against the expenditures.
That way, you can see how healthy your business is at any given time from the present to the next six months.
Once you have created one, you can update that same report. Then, you are always prepared for what lies ahead, which is where most businesses go wrong from a financial viewpoint.
Lend From Small Time Vendors
Cashfloat is the prime example of a small-time vendor that can help you out in your time of need. Banks might lend you more money, but Cashfloat lend it you at a rate that is better suited to your needs.
Remember that lending more money isn’t necessarily the best way to go, especially if you are a small business. As a small business, your profit margins won’t be able to cover the repayments, and you will end up in more debt that you cannot afford.
Small loans, however, will keep your business afloat until pay day. So, instead of occurring fines and possible penalties, lend the cash for a short period and then pay back the loan as soon as possible. It is important to remember that detail. Otherwise, the loan could cost you a lot.
Ask For An Advance Deposit
If you are offering a service or a product that is expensive, you run the risk of not receiving payment.
The client may only need the service once, and some clients are not picky about forgetting their part of the deal.
Obviously, you cannot afford that to happen. So, you can out a precaution in place which should cover you if anything does go wrong.
Ask them to pay half upfront and the other half when the job is over. Both parties get a good deal because there is an element of safety involved on both sides.
Accept Partial Payments
Too many businesses are stubborn about being paid all at once. It is a type of greed mixed with cynicism at not receiving the rest of the payment. Although it is preferential to get the money all at once, it is not feasible at times. So, instead of letting your ego get the better of you, accept partial payments. After all, it is better to get something rather than get nothing. Even if they pay a quarter of the total amount on the deadline, that twenty-five percent could go towards another payment. Don’t cut off your nose to spite your face.
Review Your Expenses
Every business has an expense that they could cut; they just don’t know it yet! Take a look at your accounts and your biggest expenditures.
Could you realistically cut them to make them more manageable? A great example is energy overheads.
All you have to do is let a rival firm know you are interested in switching providers, and they will give you a better rate.
Over the course of a year, that could save you thousands.
Save For A Rainy Day
Don’t spend it all at once!
Put away a little bit of cash each month in case the worst does come to the worst.
That way, you always have a backup plan.