Keeping careful watch on your cash flow is particularly important when inflation is an issue. If your expenses are increasing and you’re losing sales or customers are slowing payments, you need to take appropriate action quickly. Here are several steps you can take.
Invoice quickly. Don’t wait until the end of the month to send out invoices. Send them out as soon as work is performed or products are delivered. The sooner you send out invoices, the sooner you’re likely to get paid. Simplify the process by using ZenBusiness Money to create and send out one-time and recurring invoices at any time or from any location.
Review expenses weekly. If your expenses are going up, you don’t want to wait until the end of the month or end of the quarter to find out and make adjustments. Here again, ZenBusiness Money helps by giving you real-time reports that put expense and other financial data at your fingertips.
Run a credit check on new customers. If you have a new customer who places a large order, run a credit check before filling the order or signing a service contract with them. If the credit check shows a problem, ask the customer to pay in advance.
Stay on top of accounts receivable. Don’t do more work or sell more to past-due clients until they’ve paid their outstanding balance.
Require immediate payment. Avoid slow or late payments by requiring immediate payment. Make it easy for your customers to pay you by accepting credit cards and other common forms of payment.
Related: Find more ways to fix cash flow problems
Reduce costs to combat inflation
Although prices may be increasing, your business may be able to counteract inflationary trends by reducing or eliminating some expenses. Here are some suggestions:
Reduce Credit Card Processing Fees. Credit card processing fees take a significant bite out of small business sales. Although average credit card processing fees range from 1.5 to 3.5%, it’s not unusual for small businesses to be paying a lot more. If you’ve been in business for a while, have steady sales and get few if any chargebacks, contact your merchant card provider and ask for a lower rate. If they won’t lower your rate, contact other providers and ask what their rates are. Depending on the volume of business you do you might be able to save hundreds of dollars every month.
Switch from landline phones to VoIP. If your business is still using traditional phone services, you may save 30 to 50% of phone costs by switching to VoIP. VoIp stands for voice over internet Protocol. In other words, phone calls go over the Internet, instead of through conventional phone lines. If you have just a few phone lines, making the switch is relatively easy.
Ask for lower prices from service providers. Some of the services you subscribe to may automatically increase their rates once a year. Find out what deals are being offered to new customers for such services, and then contact customer support and ask for a reduction in your price, or ask about reducing the level of service. One micro-sized business that used their local cable company for the business’ Internet and two telephone connections saved more than $30 a month by calling the company and asking for the same pricing new customers were being offered.
Ask for a rent reduction. Do you rent space for your business? Is there a lot of vacant business space in the area? If there is, check what the going rate is, then ask your landlord if they’d lower your rent. If your lease is up for renewal soon, or if there’s an “out” clause in the lease that would let you end the lease early without penalty, the landlord may agree. Getting less money from a good tenant is better than getting no money while the space is vacant.
Downsize your office. The pandemic showed us that many businesses could operate as well remotely as they could from dedicated office space. Not surprisingly, it also revealed that many employees would rather work from home some of the time or all the time. If you’ve seen that your business functions well with fewer employees in the office, downsize your space when your lease comes up for renewal. Or, work virtually all of the time. If your lease is long term and you don’t need all the space, check the lease terms to see if you are allowed to sublet space you aren’t using.
Reduce computer printouts. How many documents are you and your employees printing out each day? How many are never looked at again? And if they are looked at again, why do they have to be looked at in print? Save money on paper, printer ink or toner, and wear and tear on your printer by storing documents on your computer or in the cloud instead of printing them out. The less you and your employees print, the less filing cabinet space you’ll need, too. One caveat: be sure all computers are backed up daily.
Eliminate unnecessary expenses. Are there services or subscriptions you’re paying for that you no longer need? Check your credit card bill to see if there are any monthly recurring charges you can eliminate.
Pay business expenses with a cash-back credit card. If you pay off your business credit card balance in full every month, use the card to pay as many bills as you can. Internet service, cell phone service, cost of inventory, are just some of the recurring costs you may be able to charge that you aren’t charging now. (Just be sure you don’t get charged a surcharge for paying with a credit card.) If you use the cash back reward as a payment toward your balance and if you pay your balance in full, you wind up reducing your out-of-pocket expenses by the cash-back amount.