Cash flow is an important metric to look for when analyzing your business’s finances. Defined as the movement of money — income and expenses — it provides an accurate overview of your business’s ability to pay liabilities. If you spend significantly more money what you make, this suggests that you won’t be able to cover debt and other liabilities. You can increase your business’s cash flow, however, by doing the following.
Explore Different Insurance Solutions
According to LegalZoom, insurance is the single biggest expense associated with running a business. Regardless of the type of business you operate, it probably needs insurance. Rather than choosing the first insurance company that offers you a deal, shop around and get quotes from multiple providers.
There are certain documents that can (and should) be stored in digital format instead of printed. U.S. businesses spend millions of dollars each year on printer paper, most of which is discarded in the trash. Before printing a document, ask yourself if you really need to print it. Perhaps you can save it on your computer to save money on stationary and increase your business’s cash flow.
Invest in Marketing
You have to think of marketing as an investment: It costs money, but like any smart investment, it can help your business make more money in the long run. A study conducted by Neilsen found that the average return on investment (ROI) for marketing was 9%. This means for every $1 you spend to promote your business, it will yield $1.09 in sales. Of course, certain marketing channels offer higher ROIs, and you can optimize your marketing campaigns so that they reach your business’s specific audience. The bottom line is that you should invest in marketing to increase your business’s cash flow.
Collect On Outstanding Invoices
Does your business have one or more customers who haven’t paid their bill? Outstanding invoices such as this are a common problem for businesses that accept post-service payments. By performing the service upfront, the business is counting on the customer to pay the bill. And if the customer doesn’t pay, the business will have to write off the bill as bad debt. To prevent this from happening, you should proactively contact customers with outstanding invoices to request payment. If a customer can’t pay the full bill, discuss a payment plan that can fit his or her budget.
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