All business owners should constantly look for ways to reduce costs in order to improve cash flow in the business. Cash conservation allows you to generate reserves that can be used for unexpected emergencies.
Here are a few thoughts to consider for improving cash flow:
1. Lease equipment.
This avoids the upfront costs when there is a need to purchase equipment. Leasing agreements sometimes include maintenance so you will reduce costs repairing and maintaining older equipment.
2. Review banking.
Watch for creeping bank fee increases. Meet with your bank manager and work to reduce monthly service fees and interest on operating lines. This can save a significant amount monthly.
3. Go Paperless.
Make the effort to reduce paper within your own operation by converting documents to e-copies. This will reduce storage and handling costs. Also offer customers electronic invoices and save the cost of printing and mailing to your customers.
4. Collect cash in advance.
If you offer credit terms, try collecting part of payment in cash up front. This not only improves cash flow but reduces risk on any receivable.
5. Review operations.
In place of staff reductions, consider eliminating unnecessary tasks or product content. Functions should add value that customers are willing to pay for. If the value cannot be measured it cannot be managed. Cut out waste and preserve cash.
These are a few suggestions for saving money that can be put in place and provide benefits of improved cash flow.
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