5 Ways To Improve Your Cash Flow – Our sales doubled from 2k in June to over 100k every month in December! This is an exciting time for business. However, while the high growth figures are exciting, it is a difficult time for us from a cash flow perspective.
I still remember maxing out my credit card to pay for inventory orders and worrying about whether our deposits would hit the bank in time to pay our suppliers.
5 Ways To Improve Your Cash Flow
Now we have identified some points that you can make as an e-business owner to reduce costs, improve cash flow and increase the value of your business venture.
How To Improve Your Law Firm Cash Flow
When it comes to cutting costs, it makes sense to start with the top line items on your profit and loss (P/L) statement.
For many ecommerce businesses, the cost of goods sold (COGS) line will suffer the most. We work with some experienced ecommerce buyers and it’s often the first thing they tackle to reduce costs and improve the value of new acquisitions. If effective, this can lead to quick wins and instant value addition to your business.
A good strategy to reduce your COGS is to buy in bulk. If you are buying in bulk, your factory may agree to give you a lower price per unit.
For investors, it often appears that they buy a business as soon as they purchase 3-6 months of inventory which gives them a good leverage to negotiate prices.
Immediate Actions To Take To Improve Cash Flow
If you have cash flow and can’t afford to buy more for a few months, that’s fine too.
Instead of contacting your supplier with a single order, explain to them your 6 or 12 month plan. Then ask for a price based on your expected orders in 6 or 12 months.
For example, instead of ordering 1,000 units. Explain to your supplier that you will order 12,000 units this year and that your price should be based on the 12,000 units you will order this year.
This doesn’t mean you have to pay for the entire annual inventory at once. But it also gives your suppliers a better understanding of your purchasing plans and expected future volumes, which can often cost you less.
Ways To Improve Cash Flow In Your Business
Reducing your COGS can be a big savings for your business. This can save you a lot of money, improve your cash flow and lead to a higher business valuation.
Sometimes it can help to bring in a third party to help you negotiate with your supplier. Our team has extensive experience in supplier negotiations, so send us a message if you need our help.
The better you manage your inventory, the better you can think about your future orders and avoid ordering too much or too little.
This means having the right amount of inventory needed to run your business. Not much. Not too small.
Steps For Better Cash Flow Management
To optimize your cash flow, you want to maintain the minimum inventory you need. Of course, keep in mind what inventory you need to avoid running out of stock.
Keeping an efficient inventory allows you to reduce the capital invested in inventory so that you can use it in other areas of the business and avoid the need for external financing.
This means that there is a good tracker and template for redesign to anticipate your future needs. You need a good tracker that shows how much inventory you have now, how fast your inventory will move, days left in stock, how long it will take to re-order.
This will give you the insight you need to place orders when you need to keep stock without adding cash to excess inventory.
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Keeping an efficient inventory won’t save you money in a word, but it will free up cash flow and allow you to put that money to work and reinvest it in other areas of the business that will help you grow.
As we’ve said before, cash is king, and what you can do to be more efficient with your capital will help you run your business better.
If your supply chain is a mess, it’s a good idea to consult with some experts to help you stay on track.
This can be a challenge for you as a business owner because you have to pay for your inventory before you actually sell it.
Best Practices For Managing Cash Flow In A Financial Startup
If you build some background and good relationships with your suppliers, you can negotiate better payment terms to free up more cash flow for your business.
A good place to start after the standard 30/70 is to ask for 30/40/30. So finally 30% down to 40% and net 30 for the remaining 30%.
Getting an extra 30 days for the final payment section allows you to start selling your inventory and generate income to pay off the final balance.
We work with businesses that can start an order with no upfront payment and the balance is due 60 days after the order is completed.
Tips To Optimize Cash Flow In Transport & Logistics
Anything you can do to improve the 30/70 standard will boost your cash flow and allow you to deploy it to other parts of your business that will help you grow and eliminate the need for outside financing.
In recent years there have been many new credit cards and payment methods that you can use to increase your cash flow.
This will not only improve the value of your business but also reduce your need for outside capital.
Check out the Breaks Card that gives you 60 days with no interest payment terms! This can be great and when used in conjunction with better payment terms with your suppliers can really improve your business cash flow.
Ways To Improve Your Law Firm’s Cash Flow
Sign up for Plastiq, which lets you pay almost any bill with your credit card for just 2.5%!
The combination of Brex cards and Plastiq can be a real game changer for your ecom business cash flow. I wish they had launched a few years ago when I was growing my ecom business!
You can do this by getting multiple quotes before shipping and making sure your third-party logistics (3PL) contractor offers the most efficient warehousing solution for your needs.
Most ecom businesses rely on a single carrier. It’s nice to be able to shop around and know you’re getting the best rates.
Tips For A Better Cash Flow Management
But many ecom businesses use the first FF they start working with and never compare prices. This can be a great opportunity to save money on any future shipping.
If you need help comparing FF prices, please send us a message. Because we handle bulk shipping for our customers, we can get a satisfactory rate that we can ship to you.
In addition to shopping around for the best FF quotes, you want to make sure your 3PL is the best fit for your needs.
Each 3PL is unique and has its own business model. For example, some 3PLs have lower storage costs and greater selection and packaging. Others have higher storage costs and less selection and packaging.
Five Ways Your Small Business Can Improve Cash Flow Right Now
Depending on the nature of your business, a different 3PL may make more sense for you. So shop around and find what’s best for your business!
If you primarily sell on Amazon FBA, you may want to consider 3PL warehouse vs. FBA can save a lot of money by storing excess inventory, which has high storage costs.
Managing a 3PL can add complexity to your business, but it can also save you a lot of money.
If you hate solving this problem, please send us a message and our team will be happy to help. Our experienced supply chain team has a deep network of logistics and 3PL partners that enable an efficient supply chain and cost savings for your business. By clicking Continue to join or log in, you agree to the User Agreement, Privacy Policy and Cookie Policy.
An Entrepreneur’s Guide On How To Manage Business Cash Flow
“If cash flow management is your problem, making a lot of money won’t solve your problem.” – Robert Kiyosaki.
Whether your business is in the import, distribution, manufacturing or service sectors, cash flow is the lifeblood of your company. It’s something that keeps the fire going. However, it is very difficult to maintain the money coming in and the money going out.
Create and send invoices with your goods upon delivery or completion of work. Don’t wait until the end of the month. Bill in advance for parts of the project, especially if you need to invest in products or people to help with the work.
Make the invoice easy to read, make sure your terms are clearly stated, list expiry dates somewhere (perhaps in bold) give clear guidance on the types of payment accepted, including late information if applicable.
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Use mobile payment methods to get paid on the spot. Consider an app or device that turns your smartphone or tablet into a mobile POS.
If not for phone payments
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