PayPal Payment Gateway: Six Strategies for Optimising Cash Flow Management in Your Business

Cash flow management is critical to the financial health of any size organisation, especially for small and medium-sized businesses and start-ups, where every penny counts towards the stability of their business operations.

So what is cash flow? It refers to the net inflow and outflow of funds to and from a business. In other words, it is the difference between what a business has and what it owes. Ideally, there should be a gap between the two to ensure smooth day-to-day operations and business growth.

On the contrary, negative cash flow can affect a business's ability to expand, explore and even carry out day-to-day activities. In this article, we'll provide you with some easy-to-follow strategies to help you improve your business's cash flow management.

1. Deposit of cash balances into corporate savings accounts

Always keep your personal and business finances separate. This makes it easier to monitor cash flow, track expenses, and tax planning. If you don't have one, open a separate business savings account and choose a bank with the best interest rate.

Compare the interest rates of different banks and the schemes they offer. Also, make sure there are no hidden fees, such as monthly maintenance fees. Check if the account offers a higher return on your money, which is usually much higher than an individual savings account.

2. Disposal of surplus, obsolete stocks

Market demands are constantly changing and the inventory you have on hand may become old and outdated. Instead of expecting someone to buy these materials one day or that they will come in handy, you may choose to liquidate or resell them.

It is more favourable to sell old stock at a lower price than to let them occupy the shelves for a long time! It's better to have income than nothing. In addition, doing so saves space for other items. Inventory that doesn't sell only adds to storage and maintenance costs.

3. Requests for advance payment for large orders

If someone places a large or custom order, don't hesitate to ask for an advance payment of at least 50%. In the case of a bespoke order, it applies only to that individual or organisation. Therefore, charging an advance payment both provides security and reduces the risk of late or reduced payments on delivery. It also prevents you from having to advance a large amount of cash for your order.

You can also apply the advance to the production of the product. Customers usually understand this and you can include it in your policy to avoid any disputes.

4. Provision of early payment discounts

Firstly, make sure you send your bills on time. You don't have to waste time chasing payments if you have a regular procedure for sending bills quickly. You can instead remind your customers when their bills are due.

Typically, businesses give a 30-day payment deadline after the bill is sent. However, you can offer your customers discounts for prompt or early payment. For example, you could offer a discount stating that customers who pay within the first 10 days of sending a bill will receive 2%! This may allow you to receive payments earlier, thus improving cash flow. Make sure you set up a programme for this!

5. Installation of a payment gateway to expedite the collection of payments

Provide your customers with online payment solutions for quick collections. You can ask your customers to pay online through cards, UPI, wallets, etc., thus avoiding the hassle of sending bills and delayed collections.

Payment gateways like PayUmoney provide all payment options like debit/credit cards, UPI, wallets etc. It is highly secure and easy to use. Moreover, it provides same day settlement to the merchants and through IMPS, merchants can receive same day settlement for amounts less than 2 lacs. Thus, you receive the payment while the customer pays!

Signing up for PayUmoney will undoubtedly improve your cash flow and fuel business growth.

6. Reassessment of daily expenditures

Cash flow management is not only about money coming in, but also about money going out. Regularly review your business expenses to see if they are all necessary and optimal.

Optimise processes and use the various software and tools available on the market to reduce the time taken for lengthy processes, such as sending out bills to all customers.

Know that you don't have to buy everything new. Look around to see what equipment can be purchased second-hand and for one-time use only.

concluding remarks

Maintaining a positive cash flow can give you the courage and support to make new attempts in your business. Using the above strategies can go a long way in improving your business cash flow, freeing you from financial stress and fuelling future growth.

As mentioned above, integrating great payment solutions is crucial to collect payments quickly and provide a seamless payment experience to your customers.PayUmoney is India's leading payment gateway. Learn more.