Airpay payment gateway: 9 simple tips to help you improve your business cash flow!

For business owners, the sole responsibility of maintaining a business, regardless of size and profitability, depends on cash flow. If you're confused by the term "cash flow," read on to learn more about the importance of a steady cash flow and how to improve it!

"Entrepreneurs think profit is the most important factor in a new business. But profits are secondary. It's the cash flow that counts." -- Peter Drucker

How to improve cash flow: cash flow vs. profit

When running a business, it is important to pay close attention to these financial parameters: cash flow and profit.

Cash flow is the sum of business flows as deposits and withdrawals.

Profit, also known as net income, is the difference between sales revenue and business expenses.

For example, you run a very profitable business. But some of your largest customers take time (30 to 60 days) to pay. This, in turn, can severely impact your cash flow and even delay payments to suppliers. No matter how profitable your business is, cash flow is key to keeping it running!

Any business can have positive or negative cash flow, and you can easily determine which category your business falls into by following these pointers:

positive cash flow

negative cash flow

You begin to reinvest in the business

Your payroll is affected

Your Debt is Settled

You lack cash for day-to-day operations

Your current assets begin to increase

You are one step away from bankruptcy

Simply focus on the following 9 steps to improve cash flow and shift your business focus to positive cash flow.

9 Simple Tips to Help You Improve Your Cash Flow!

1. Estimate your cash flow

Estimating cash flow helps to plan future steps.

Start forecasting your cash inflow by recording the previous year's sales.

Also includes GST refunds, sale of assets, licence fees and other sources of cash.

Then forecast your cash outflow and estimate the cost of manufacturing the goods.

This includes loan repayments, investments, building rentals, etc.

Now, estimate the overall cash flow by summarising the cash inflows and outflows.

Finally, arrangements are made to analyse actual data and estimated cash flows on a monthly basis.

Tip: Use this information to identify potential problems and take strategic decisions to improve cash flow.

2. Best way to collect unpaid bills

Implement simple and effective ways to collect payments from your customers in a timely manner! Here are some quick tips to improve your billing process:

Send your bill quickly

Use reminders to alert customers of unpaid bills

Changing the terms so that late payments incur penalties

Provide incentives for early payment

Tip: Choose a plugin such as "PayU Payments Plugin For MS Excel", a one-click payment plugin. You can create and send payment links to make real-time payments via SMS, email or a combination of both.

3. Selection of payment platforms

Online platforms enable businesses to collect payments faster, which improves cash flow. It makes collecting payments a breeze. Whether you are online or not, you can use a payment gateway to make collecting payments easy.

Learn how to choose the best payment gateway and easily change the way you receive payments.

4. Leasing versus buying: why lease?

Leasing is the best option when it comes to maintaining a steady cash flow for day-to-day operations. Leasing anything from supplies, equipment, real estate to any asset can be paid for in instalments, which is a business expense in itself. In addition, you can invest the extra cash in things that will benefit your business in the long run, such as research and development.

5. Need quick cash? Extend accounts payable

Looking for a quick way to improve your cash flow? Choose to extend accounts payable - the money a business or company owes to creditors, lenders, employees, or the government (taxes).

This is not the preferred option, but it is an easy way to improve cash flow in times of financial distress. For this reason, it is vital to maintain a friendly relationship with your suppliers. Therefore, you can ask your suppliers for a 30 or 60 day extension. At the same time, make sure that you extend the payment time in your terms and conditions as well, so that you have enough cash to make any large payments.

6. Reducing costs and improving cash flow

Identify unnecessary costs in your business, such as operating and overheads, and start addressing them. Here are some simple but effective ways to do so:

Reduce your electricity bill by choosing energy efficient lights and switching off unused electrical equipment.

Control travel expenses through the use of remote or video conferencing.

Change the shipping policy to ensure that employees use regular shipping instead of courier!

7. Periodic inventory checks

If large amounts of money are trapped in unsold inventory, take the necessary steps to maintain a stable cash flow.

Regularly review your full inventory list, e.g. property, stock items, etc.

Reduce orders from suppliers when you have an inventory surplus.

Encourage customers to buy old stock by offering discounts

8. Selection of a stable growth plan

Growing too fast can be a reason for a company to run out of money. This so-called investment may deplete your cash reserves until you get cash from sales. In addition, before borrowing, choose sources that offer lower interest rate funding. A steady growth plan is a healthy way to improve your cash flow.

9. Make wise investments

Now that you know how to improve your cash flow, choose to invest your cash inflow by

Loan repayment obligations without penalty

Investing in ways to increase sales

Open a high-interest savings account that can be reinvested in the business

How to improve cash flow from the front end of sales

In addition to these 9 simple tips, here are 3 ways to improve cash flow and drive sales:

1. Using smart strategies: bundling products

Offering discounts is not the same as adding value to a product. You can achieve this when you offer your product with a bundled service. A good example of this is an e-commerce company that offers free returns to dissatisfied customers. This strategy increases sales by removing the worry of buying a new product online. Read How Bundling Products Drives Sales.

2. Generation of duplicate operations

If you run a business such as retail, you will know that repeat customers are more beneficial to your business in the long run. You can encourage your customers to shop more by using loyalty programmes, VIP cards and other offers that will increase sales and therefore cash inflow.

3. Pre-sales for promotional purposes

Pre-selling is an effective way for any business to promote their products before they go on sale and sell them to customers in advance. This method saves you time and improves cash flow because at least a portion of the payment is collected before the product is packaged. You can use terms such as "shopping now is a smart way to plan for the future" when promoting your products.

Maintaining cash flow takes discipline, planning and the right strategies such as your own 9 Simple Ways. Now that you know how to improve your cash flow, you need to work hard to keep it flowing as it is the lifeblood of your business.

While your business marketing efforts are in place, it's also a good idea to have an all-in-one payment solution. Enjoy the best payment gateway experience now and grow your business with ease!

Cash Flow Frequently Asked Questions

1. How can manufacturing improve cash flow?

Manufacturing increases the cash flow of a business by increasing investment to produce more goods or services.

2. How can negative cash flow be improved?

Improve negative cash flow by looking at financial statements such as the income statement, balance sheet and cash flow statement. Understand the root cause of the problem. Next, avoid slow payers or improve payment terms so people pay on time. Another is to reduce overhead costs. Look at operating costs and overheads and spend only on what is really needed and prioritised. Talk to different vendors and see if you can negotiate with them to reduce some costs. A final suggestion is to find new ways to increase sales and offer more convenient payment options.

3. How can cash flow be increased from operations?

Increase your business's operating cash flow by looking at current assets and current liabilities. For example, you should examine inventory, finished goods and supplies to identify merchandise or items that have not been used for a long time. You can discard or sell these items so that losses can be reported and cash flow is not liquid for income tax purposes. It's better to sell old inventory at a lower price than to let it sit on the shelf!

4. How can small businesses improve their cash flow?

Small businesses can improve their cash flow by:

Send your bill now

Give customers all payment options

Periodic analysis of the statement of cash flows

Investing in business

5. How can free cash flow be increased?

Increase the free cash flow of the business by increasing net income and reducing the use of working capital.

6. How can cash flow projections be improved?

Improve cash flow forecasts by analysing business metrics, forecasting sales, and diligently collecting payments.

7. How can cash flow management be improved?

Improve cash flow management, starting with creating separate business accounts, using short-term financing, tracking slow-paying customers, and monitoring inventory.