For business owners, curbing your expenditure is a practical way to improve your cash flow without incurring risk to your business.
Trevor Gosling, co-founder and chief executive of Lulalend, says that creating a well-documented plan to engage in a cost-reduction strategy is essential.
“Map out any areas in your business that could do with an overhaul or cost reduction. Avoid waiting until the last minute to implement your plans. Instead, take immediate action. That way you may have a well thought out strategy in place for when the leaner months approach,” said Gosling.
Going green
Being environmentally friendly can also act as a cost-saving initiative.
Going digital can create a clean carbon footprint for small business. Go paperless with online invoices, use energy-saving bulbs and water-sparing methods on your taps. Encourage employees to actively conserve water and unplug devices when not in use. For a paper-heavy business, consider recycling. Your business will be saving the environment, cutting costs and making an extra buck along the way.
Managing cash flow
According to Gosling, one of the biggest challenges that small and medium-sized enterprises (SMEs) face is being paid on time.
Historically, businesses have given clients 30 days to pay. However, the current trend is to afford clients two weeks or less to settle the payment. Give clients clear notice on payment instructions, as well as the payment deadline in your service agreement.
Improving supply chains
Sourcing the best quotes from different suppliers can also be a cost-saving tip. Just be sure that while you are sourcing the best quote, you’re not compromising on quality.
Fostering valuable relationships with your suppliers will put you in a better position to negotiate with them – giving you a better likelihood of them offering you discounts and special deals.
Long-term trust between business owners and suppliers can open opportunities for flexibility in extending your credit from a two-week payment to a four-week payment plan. Negotiation and the willingness to accommodate one another goes a long way.
Access to capital
Consider short-term business funding to help your business if you are experiencing a dip in cash flow. Fast access to additional funding can provide a vital buffer during those leaner times. Look for flexible repayment plans that can help your business sustain a healthy cash flow.
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