Cash management is a skill that any business team needs to learn. But for a small business, it can mean the difference between survival and going under. So many companies these days leak money, yet with some tweaks to how you operate, you can stem the bleeding a little.
SMB Cash Management Tips
Get Help from the Government
Yeah, you read that right! The government in many countries will help small businesses to medium businesses. In nations like the UK, Australia, and the US, there are government departments that offer low-interest, long-term small business loans to help stimulate local economies. These small loans can be highly beneficial to a small business that is struggling, needs to expand, or wants to upgrade, helping with cash flow issues in times of need.
Raise Prices if You Need To
It can be a tough decision to raise prices, especially when you know customers are already struggling to manage other things in life. However, it is unfortunately necessary from time to time. Keeping prices low will eventually lead to income problems as suppliers will undoubtedly raise theirs. Some analysis is required, and you can keep any price rises to a minimum. But they will need to be in line with inflation or other costs to stay afloat and competitive.
SMB Cash Management through Austerity
Just as you might need to increase prices, there is also often a need to cut internal costs at the same time. Similar to how you manage your household finances, it helps to take a look at income and expenditure every now and then. It is more than likely you are overspending on something. Take a recent survey for instance. A poll of over 1,000 companies around the world found that 94% of companies are overspending within budgets on cloud computing services.
Streamline Inventory Management
Inventory management can mean the difference between a smooth operation and staggered hiccups. It not only affects how your business runs on a day-to-day basis, but inventory issues can also impact the bottom line. Buying too much stock is a perfect example. Then again, you can lose out by under-purchasing. An analysis of what you need and when will help. Of course, there are excellent apps that can help with this, such as Sortly, SalesBinder, and Backbar.
Send and Follow Up on Invoices
Prompt invoicing can be a Godsend when it comes to managing the cash flow of a business. Most experts recommend invoicing within 30 to 60 days. However, invoices should really be sent as soon as possible. Another critical part of invoicing is chasing them up. If you don’t receive payment, you must put in the effort to get the money you are owed. This means making phone calls, sending emails and letters, and, if necessary, using a debt collection service.
Summary
Small business loans from the government can help with SMB cash management. Cutting costs is a good first step and can help identify unnecessary expenses. It also helps you manage your inventory and invoicing procedures and be willing to chase customers for the money owed.
