They say “cash is king”. A profitable business may have to close its doors because it doesn’t have the cash on hand to restock or pay employees. In this blog, let’s explore ways to better manage your cash flow.
In an ideal world, your customers would pay when they place an order, but you can train them to at least pay “COD” or “cash on delivery”. Generous payment terms can help increase revenue, but they do cost you money. Think about charging interest on payment terms longer than 30 days.
Talking about the ideal world, you want to pay your vendors as late as possible. You want to collect from your customers before you have to pay suppliers. See if you can get 45-day payment terms. Nothing is more important than good relationships though. No matter what the terms are, make sure you pay on time!
Manage the flow of your customers. Some businesses are seasonal. For example, if you sell school supplies, offer promotions in the middle of the semester to make sure cash is coming through the doors all year. If you have a restaurant that is not busy at lunch, create a lunch special.
You can also improve cash flow by bringing more cash into your business. This means increasing margins. You can do this by raising prices, but it’s better to keep the price the same and try to reduce costs by cutting excess out of your supply chain.
The foundation of managing your cash flow is to anticipate your needs. Well managed businesses look at their historical data to plan for their future spending. Luckily, you have OZÉ! You can use your dashboard to view historical spending and earnings.
Put your cash to work! By saving your money in an interest-earning account, your money will help you make more money while you are sleeping. Before opening an account, make sure you understand the fees and minimum balance requirements.
OZÉ is a mobile platform that helps small business owners in Africa (starting in Ghana) to make data-driven decisions to improve their performance, tap into networks, and access capital. Entrepreneurs can track their sales and expenses, who owes them money and who they owe money to, see their profits on a dashboard, send receipts and invoices, and even access a business coach. Interested? Click here to try it today!