If generating profit was all you ever needed to worry about when it comes to your business finances, then life would be so much easy. Running a business would be such a joyride. But the reality is, generating enough profit is just one on the list of the things you need to do to keep your business afloat financially. Profit is one side of the coin, and, of course, the equally important other side of the coin is Cash flow. --Cashflow vs Profit
Cash flow is the total amount of money going in and out of a business in a period. In the day to day running of a business, money is spent and received. However, just as making sales does not automatically translate to making profit, making profit does not automatically translate cash inflow. And it certainly does little or nothing at all to stop cash outflow.
Cash flow is only concerned with the money at hand. How much is added to it, and how much is spent out of it. A company could be generating enough profit but not enough cash flow. And this will become a problem when it continues for a long time. Soon enough, the cash inflow will be insufficient to cater to the day to day running of the business. And we all know how that story ends. But that does not have to be your business story. So here are five Reviews to improve your cash flow.
Review your payment plans: payment plans remain an effective sales incentive for customers. But when it begins to hurt your business, then it might not be such a wise decision. It is okay to review your payment plans to generate a higher inflow. You can shorten the plan options, increase the interest and the percentage of downpayment.
Review your pricing: if you are selling for too little, not only is your profit suffering but also your cash inflow. This is not about over-charging your customers. It is about increasing your cash inflow to cater for your outflow and grow your business. However, price review should be reasonable as price hike often results in customer churn.
Review your partners: improving cash flow is not only about increasing inflow. It also entails decreasing your outflow. Review your partners’ pricing, terms of operation, and the value they give. Consider how that is costing you more and what to do about it. This could mean negotiating better pricing, better terms or moving on to a different provider/supplier.
Review your structure: go over your business structure and eliminate the unnecessary. You could replace outdated technologies, rule out unnecessary departments, downsize, or outsource some services. You could also review the work terms to allow some employees work remotely. And if every employee can work remotely, that's even better. This will considerably cut down the cost of running the office every day.
Review your payment methods: payment methods affect our businesses in ways that are easy to miss. Some customers can be discouraged from buying just because you don't have their preferred payment method. It is your job to ensure your customers have everything they need to move to the next stage of the sales funnel. Add more payments methods for customers to choose which they are comfortable with. Most importantly, partner with a PSP that guarantees a seamless experience for your customers.
At Redbilller, we understand the role of payments in building a sales relationship with your customers and in the growth of your business. That is why our primary commitment is to help you provide a seamless payment experience for your customers. Our checkout offers multiple payment options for your customers to use. And our real-time notification enables you to keep track of all payments.
Cash flow and Profit are similar in this regard -just as you cannot make too much profit, you cannot have too much cash inflow. If by any definition you do, it is a good thing. The point is, working to improve your cash flow is a never-ending job. Periodically review your cash flow and look for a way to increase your inflow and reduce your outflow. And whatever strategy you employ, make sure it is with your customers and staff in mind.