Preparing for the holiday season is a challenging task for businesses. There are seasonal fluctuations, extended hours, and increasing activity that can make cash flow management more difficult. If you find this situation stressful, you are not alone. Many SMEs experience this, so owners need to devise a better plan to manage their cash flow as Christmas and the New Year approaches.
Here are some ways to maintain a good cash flow during this season: the global pandemic impacted many businesses in a multitude of different ways last year. It was like a ring of fire that everyone had to go through in some shape or form. Some had to close, some thrived, and others even grew tremendously. New businesses also emerged. Stay in the game this 2021 by reinventing or reviewing your business strategy, learning from the monumental pivot of 2020.
Strategy #1: Build Better Relationships
A strong relationship with clients, customers, and suppliers is essential in every business’s success. Cultivating a good relationship with others will help you gain lifelong trust and honest feedback when you need one.
Show appreciation to your long-time customers with exclusive offers or loyalty programs. And remember, it’s not just loyal customers: Beat your competitors with excellent customer service from the very first contact point. Turn every first-time buyer into a loyal one.
Strategy #2: Prioritise Generating Cash Flow
As they say, “cash flow is the king”. No business can operate well without sufficient cash flow. Maintain reliable cash flow to help you achieve your business goals by:
- Improving how you monitor your cash flow by creating a cash flow forecast.
- Checking what you no longer need this year to cut unnecessary costs.
- Speeding up due payments by reminding your customers about their due date.
- Offering incentives and discounts to early payers (do the math to ensure that the tradeoff is worth it in the long run).
- Selling more to existing customers is cheaper than acquiring new ones. Analyse what they’re buying, and why, to help generate deals for them that work to increase your access to cash flow.
- Tighten your credit requirements and conduct sufficient research and due diligence beforehand to determine the risk of extending credit to each customer.
Strategy #3: Improve Your Marketing Strategy
Social media is a great tool, so use it to connect with your customers or give regular updates regarding your products. Use your customer database and have targeted social media advertisements or run a giveaway contest to increase engagement,
You can also educate your audience with your content, whether through video marketing, live streaming, or posting regular content in general. Giving real, valuable information is how you organically generate brand awareness.
Different social media channels are also useful for answering customer questions, starting conversations, personalising your marketing messages, and simply maintaining a presence wherever your audiences are.
Strategy #4: Ask for Customer and Staff Feedback
Ask your customers for feedback. They’re the ones buying your product or services, so knowing what made them buy your product or service in the first place can help you increase sales and improve your business.
Your staff feedback matters, too. They’re a reliable source of information since they know the business’s issues first-hand (if there are any). This helps you improve your business image and make wiser, data-driven decisions.
Strategy #5: Reinvest in Your Business
If possible, churn your business’s profits back into your company to ensure longevity. This can be done through business expansion, such as opening another store, getting better technology, acquiring a business, or starting a new one!
Another way to improve your business this 2021 is to shorten manufacturing time, invest in your team’s professional development, or invest more in customer support. You can also use alternative financing options like debtor or invoice finance to buy more equipment, improve your product, pay goods to suppliers, and other financial challenges that your business face.
Strategy #6: Consider Financing Alternatives
Never heard of invoice finance before? There are various flexible funding solutions available for Australian businesses, of which one of the most popular is invoice finance – it allows your business to access cash sooner from unpaid invoices. Debtor finance providers will pay you up to 90% of your verified outstanding invoice value upfront. When your customer pays and the funds are received by your debtor finance provider, they’ll remit the remaining 10% minus a small fee to compensate for early funding. Your business can use this cash instantly to pay your bills, secure new suppliers or invest in growth opportunities.
An invoice finance facility acts as a revolving credit line backed by the invoices you issue to your customers. You can choose to draw down funds as often or as little as you like, only paying for what you use. Instead of waiting up to 90 days for a customer to pay you your invoice, your business can access the cash almost immediately. This is an excellent solution if your SME is suffering from late-paying customers or for those growing businesses that require ongoing cash flows for working capital.
OptiPay can help increase your cash flow with flexible funding solutions for 2021 and beyond. Discuss your options and unlock tomorrow’s cash today with OptiPay.
