Cash flow is at the core of every business. If it’s struggling in any way it’s likely to impact performance in some way. Businesses are always wondering how to improve cash flow. For retailers and wholesalers, inventory is one of the largest hang ups for healthy cash flow. Therefore, inventory financing is one way to improve cash flow.
Why is cash flow important for small businesses?
Cash flow is the lifeblood of any small business. It’s the money that comes in and out of a business on a daily basis, and it can make or break a company. A business needs cash to pay its bills, expand its operations, and take advantage of opportunities as they arise.
Without a healthy cash flow, a business will quickly find itself in financial trouble. That is why it is so important for small businesses to carefully manage their cash flow. By tracking where the money is coming from and where it is going, businesses can make sure they always have enough cash on hand to meet their needs. With proper management, a small business can ensure its long-term financial health and stability.
How proper management of cash flow impacts your future business
Many small businesses fail within the first few years due to a lack of proper management of their finances.
One of the most important aspects of financial management is cash flow. Cash flow is the amount of money that is coming in and going out of your business. In order to maintain a healthy cash flow, it’s essential to keep track of all incoming and outgoing funds, as well as to have a plan for what to do if there is a shortage of cash. You must know where money is going. Proper management of cash flow can help you avoid financial problems in the future and ensure that your business is able to thrive.
Understanding how to improve cash flow is essential.
Top ways to improve your cash flow
Maintaining a healthy cash flow is essential for any business. Here are some top tips to help improve your cash flow.
Anticipate future needs
Review your pricing strategy. Make sure you are charging enough to cover your costs and generate a profit. Stay on top of invoicing. Send invoices out as soon as products or services are delivered, and follow up on any outstanding payments promptly.
Ensure you have enough inventory and be prepared
Take inventory of your current stock and assess how much you will need to meet customer demand. Next, create a production schedule to ensure you are consistently producing goods. Finally, create a system for tracking inventory levels and reordering stock as needed.
Improve accounts receivables
A/R is an important part of a company’s cash flow, and it’s important to keep it under control to avoid problems down the road. Make sure you’re invoicing your customers promptly. The sooner you send out an invoice, the sooner you’ll get paid. Follow up with customers who haven’t paid on time. A simple phone call or email can often prompt them to take action. Finally, offer incentives for early payment, such as discounts or extended payment terms.
Utilize inventory financing
By using inventory financing, you can borrow money based on the value of your inventory, which can help you stay on top of your cash flow. This way, you can keep your business running smoothly without worrying about sudden unexpected expenses. In addition, inventory financing can help you take advantage of bulk discounts or seasonal sales.
Consider renegotiation of service contracts
Negotiate payment terms with suppliers. Where possible, extend payment terms to give yourself more time to generate revenue.
Consider leasing equipment vs. buying
For businesses, having the latest and greatest equipment is important to maintain a competitive edge. However, equipment can be expensive and it’s not always possible to stay on top of the latest trends without breaking the bank.
Leasing equipment is a great way to get the latest technology without tying up your cash flow. When you lease equipment, you make monthly payments instead of paying the full purchase price up front. This can free up money that can be used for other expenses, such as inventory or marketing.
Re-structure your payment operations
With the right tools and processes in place, you can streamline your payment operations and stay on top of your cash flow. Here are a few tips for re-structuring your payment operations:
First, make sure you have a clear understanding of your company’s financial picture. Know your monthly revenue and expenses, so you can always have a handle on your cash flow. Second, put together a team of trusted individuals to manage your payment operations. This team should include an accountant or bookkeeper, as well as someone with experience in accounts receivable and accounts payable. Finally, implement strong internal controls to safeguard against errors and fraud.
Keep close monitoring of where your money is being spent
Keep a close eye on expenses. Review your expenses regularly to ensure you are not overspending.
Utilize technology
By using apps and software to track your income and expenses, you can get a clear picture of your financial situation at any given time. This information can be incredibly valuable in terms of making decisions about where to allocate your resources. Additionally, online banking and accounting tools can make it easier and faster to manage your finances, freeing up more time to focus on running your business.
Consider looking into financing options
Many businesses choose to finance their operations with a line of credit or a loan. This can give you the flexibility to make large purchases when necessary and to smooth out your cash flow when revenue is down. However, it’s important to remember that loans need to be repaid, with interest. As a result, you will need to carefully consider whether taking out a loan is the right decision for your business.
If you do decide to pursue financing, there are a number of options available. You may need to think outside the box to find a financing option that’s affordable and works for your business. While you may be able to obtain financing through a traditional bank or credit union, that may not be the best option.
How Kickfurther can help
Inventory financing can help improve cash flow substantially. However, you will need to make sure that inventory financing is affordable and will benefit your business in the long-term, not just the short-term. One of the biggest challenges of inventory financing are the requirements and the cost. Entrepreneur Sean De Clercq was once in your shoes; hopelessly searching for an affordable way to grow his company. In 2014, he founded Kickfurther. In true entrepreneur fashion, he found a solution for a major problem business owners are facing. He created a company that helps businesses get affordable inventory financing with less obstacles. Kickfurther is the world’s first online inventory funding platform that enables companies to access funds that they are unable to acquire through traditional sources. For companies that sell physical products or non-perishable consumables and have revenue between $150k to $15mm over the last 12 months, Kickfurther can help. We connect brands to a community of backers who help fund inventory on consignment and give brands flexibility to pay that back as they receive cash from sales.
Grow your business with Kickfurther
With Kickfurther you can fund millions of dollars worth of inventory at costs of up to 30% lower than the competition. It gets better though – you don’t pay until you start making sales. You’ll truly have the opportunity to create a payment schedule that works for your business. You’ll outline expected sales periods to create customized payment terms. With more than $100 million in inventory funded to date, Kickfurther can help you get funded within a day or even minutes to hours. Kickfurther can help supply your business with the working capital it needs to flourish into the company you’ve been dreaming of.
Interested in getting funded on Kickfurther? Create a free business account, complete the online application, review deals, and get funded in as little as minutes!
