Cash flow management can make or break your staffing firm. Optimizing your abilities in this crucial area strengthens your business foundations. You can minimize your risks and provide you with the resources you need for long-term success.
A study conducted by U.S. Bank showed that more than eight out of 10 business failures (82%) came down to substandard cash flow practices. The message: get your money management under control. Then, you can focus on your core staffing operations.
But how? How do you create a top-flight structure to get cash flow right?
Here are five easy ways to improve the cash flow of your organization:
Keep Good Data
Managing your cash flow means having real-time information. However, the process of tracking and compiling the data can get tough. Your busy schedule naturally focuses on the day-to-day challenges of running your staffing firm.
Still, you need to invest in keeping your cash flow information up to date. This will let you identify potential problems, giving you the longest possible time to fix them before they become critical.
Look to Grow Revenues
Want a cash-flow cushion? Increase the amount coming into your organization. Add to the top line to provide additional resources.
This growth can come in multiple forms. You can buy a rival or widen your geographic footprint. You can also add new types of clients, moving into fresh industries.
Of course, these expansions require investment. But if you have the resources and can manage the risks, your long-term cash flow position will improve as your staffing firm grows.
Think about how cash flow works. Cash flows in and cash flows out. Expansion can increase the amount coming in. But you can also control the sums going out.
Keep an eye on your expenses. Get them as low as possible. Look for productivity upgrades and shop around for lower-cost options.
Stay Diligent about Collections
Cash flow management involves receiving all the revenues that you’re owed. Maximize your incoming cash by running a tight collections operation. Here are a few steps to take:
- Make your expectations transparent. Let clients know what to expect from your collection procedures. Lay out the details in print and explicitly detail your policies to first-time customers.
- Send invoices as soon as possible. Facilitate speedy payments by delivering invoices early.
- Create penalties for late payments. A 10% late-payment fee, or other similar policies, provides an excellent motivation for clients to close an invoice quickly.
- Offer incentives to pay early. Use a carrot-and-stick approach. Pair penalties with early-pay incentives.
- Don’t offer exceptions. Once you let a customer slide, they become more likely to pay late in the future. Stick to your policies.
- Know when to cut off a problem customer. Some clients are so erratic in their payment habits that they become more trouble than their worth. Walk away from these unpredictable situations.
Have Funding Options
Even with a diligent effort and great long-term planning, you can still run into a cash crunch. Unexpected calamities can drain your emergency fund. Or a series of smaller setbacks can combine to put you in a tight spot.
Lower your risk by having access to other sources of cash. Build a relationship with a funding company so that you have the backstop you need in times of trouble. This gives you the flexibility you require to manage your cash flow properly.
Ready to Improve Cash Flow? Frontline Funding Can Help!
Know your funding options. Frontline Funding can give you the information you need to maximize your cash flow management.
Contact Frontline Funding today to learn more.