These cash flow strategies are aimed at helping you through those difficult cash times, hopefully helping you generate some cash to ease the pain just a little bit.
Even if only manage to implement one or two of these strategies, then you will have managed to free up some cash, or have some come quicker to you than you would have, had you just done nothing.
As an entrepreneur there will sometimes be times when cash is tight, we’ve all been there.
Not sure how you’re going to pay that next VAT bill?
Or want to take on a new team members and not sure how you’re going to afford it?
You are not alone.
So here we go…
Strategy 1 – Extending credit
Try to get an extension on current credit terms with your suppliers.
It might be that right now you are having to pay upfront, pay on receipt of invoice, or pay on 15 days.
Try asking your suppliers for better credit terms – they can only say no…and you’ll be in the same position you are now.
If you have dealt with them for a while, and have a good relationship with them then you can just be honest.
Strategy 2 – Getting paid faster
Ideally, you want your customers to pay in advance, or pay by direct debit/standing order.
Some people say to me – but payment in advance never happens in our industry, I can’t ask for payment in advance – however I have seen these people, time and time again, try it, and secure payment in advance.
The thing is, very often, your prospect won’t actually know what is “normal” in your industry anyway. And hey, we don’t necessarily want to be “normal” do we?!
So by asking for payment in advance you get your money in as soon as the contract is signed, or on a monthly basis if you set up a direct debit/standing order, without having to invoice and wait for payment.
But if you are in an industry where it is impossible to do those things (I mean really impossible – there are regulations preventing it) then don’t offer long credit terms to clients – ideally you want to issue an invoice with “on receipt” as the terms – which means you expect them to pay straight away (or within a day or two).
If you are in the UK I recommend you look at GoCardless as an easy way to set up being able to take direct debit payments.
Strategy 3 – Fast payment discounting
If you are really struggling with people sticking to payment terms then you can offer them a discount for early invoice settlement – so say the credit terms are 30 days, offer them a 5% discount if they pay within 7 days, for example.
That gets the cash to you much faster and might be worth the small hit on the invoiced amount in terms of your cash flow.
You can do this for invoices that you have already issued too, that are currently awaiting payment – give the customers a call – tell them that if they pay by the end of the week there the amount due to pay is reduced to £X – some should take you up on it.
Strategy 4 – Resell or upsell to old or client customers/clients
We often forget those people we already have a relationship with.
The people in your database already, your current or old clients are 10 times more likely to buy from you, and if you’ve not been in regular contact with them, they may have forgotten you exist!
So have a special offer that’s just for them – make them feel valued and special – and encourage them to buy from you again.
Strategy 5 – Ask for referrals
If you have provided a valuable product or service to your current or past customers then you can ask them to recommend a few people, who are like them, and who they think will benefit from your service, as much as they have.
There is no pressure, you are just asking them for a friendly recommendation.
Strategy 6 – Raise your prices
Most business owners are not charging enough for the great service they give their customers and you are, if you are like most of the people I speak to, probably priced at or under market.
It is important to understand that only 10% of buyers will make a decision solely based on price even in a recession.
And of course, you can add more value to the service than your competitors then you can also charge more than them too.
So raise your prices for new customers, and have a look at doing it for your existing ones too – it might be they are locked in a fixed price contract and you can’t right now…but keep an eye on it.
Of course, we need to evaluate value when raising prices – but I find that most people are undervaluing what they do deliver to their clients, and often, if you are getting no price resistance at all, that means that your prices are less than people might expect them to be, so perhaps you are leaving money on the table.
Strategy 7 – Announce a few coaching or client spots at a discount
Make it seem like a wonderful and unusual opportunity to work with you – don’t sound desperate – but encourage people by telling them there are a limited number of opportunities to work with you that have just opened up…they need to act soon to grab them.
And of course, you need to be authentic – there does need to only be a few spots available – if you say there are 3 – stick to only 3 – we are not speaking about lying to prospects here – that is not a good way to start a relationship.
Strategy 8 – Announce you are raising prices at a certain date or time
Give your clients a chance to lock in now at current rates – so they will pay in advance or sign a longer contract so you’ll have guaranteed income
If you have decided to raise your prices – give people the option to lock in early. It might be that to do that, they have to pay for the next 6 months up front, for example.
Strategy 9 – Offer a VIP option for your service
On average, when you offer a higher level of service about 20% of people usually go for that version.
So offer an upgrade to current customers, 20% are probably ready for an upscaled version of what you do.
Strategy 10 – Cutting unnecessary expenses
This may seem obvious – but is often overlooked. What are the ways you can save money?
Focus on what’s moving you forward. Are you paying for online software that you never use?
Here is an exercise that is great to do:
Take your last 12 months business bank and credit card statements – print them out.
Then get a highlighter pen.
Go through each and every item of spending on the statements, and with highlighter in your hand, ask yourself, is this spending 100% necessary to keep the (proverbial) lights on in my business – and it needs to be 100% necessary, as in, you would not be able to do business without it – and if the answer is yes, it is 100% necessary then highlight it.
You need to do this for each transaction, every month – so sometimes you will be marking things 12 times if they are monthly – that’s ok.
I do this exercise every quarter and you’d be amazed at things that creep in there. Not only that, our businesses change and evolve over time and things that were once 100% necessary are not any longer.
Strategy 11 – Launch a program which you will deliver Live
When you launch a course, you don’t have to have everything pre-recorded and looking awesome, prior to selling it. You do need to have mapped out what you will cover. However, you can pre-sell the course/program, then deliver it live to the first round of participants. You can then record the calls/sessions for the first round, and use those as your training modules in the course.
This also means that you don’t create a tonne of content, then find out when you come to sell it that it doesn’t quite hit the spot in terms of your audience.
So map out a course/program then presell it straight away, before you’ve created any of the content – people will buy!
Strategy 12 – Spending v Return on Investment
This strategy is an advancement from Strategy 10.
In this one, I want you to pick up those printouts again…and this time pick up a red pen.
Now I want you to go through the statements again, line by line, on the expenses, and this time ask yourself – is this spending delivering me a positive return in terms of either my time or my money?
If the answer is – yes – then mark it with the red pen. And again – each and every time expense come up, ask the question.
Now those things that you have not highlighted in Strategy 10 or marked with this strategy – you can cancel those – because they are neither necessary to keep the lights on in your business nor are they delivering you a positive return.
I hope that you have found these strategies useful and managed to implement some in your business.
If you’d like more tips like this, please do come and join me in my Facebook Group – https://annetteandco.co.uk/FBGroup
And if you’d like to speak about how we might potentially be able to support your business there here is the form to complete – ENQUIRY FORM
Thanks ever so much for taking the time to read my post I truly hope you’ve found it useful and insightful. If you have any questions feel free to contact us!
I am Annette Ferguson, CEO of Annette & Co. Chartered Accountant, Profit First Professional and creator of the Business Wealth Engine. We’re also SUPER social so don’t forget to follow. Here’s to your success!