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As a small business owner, managing your business’s cash flow can be tough, but it’s something you need to do to keep your business afloat—and to help avoid those sleepless nights. Whether you’ve just opened your business or you want to learn how to run an existing business as efficiently as possible, here are five tips for handling your cash flow problems.
1) Monitor your cash flow
Do you have a real-time grasp on the amount of money that comes in and out of your business each month? If not, that’s where you need to start. Keeping track of this information determines where your business is financially and what you may need to improve or change. If you’ve yet to become profitable, figure out your break-even point and use that figure to project future cash flow.
2) Take your Invoices online
If you don’t already use online Invoices, it’s worth considering for your business. Paper invoices can get misplaced—by you or by your client. You’ve probably heard “It must have gotten lost in the mail” at one point or another. Online invoicing allows you to track your billing activities in one place.
Using Square Invoices lets you easily create and send an invoice and see which invoices have been paid plus which are still outstanding. The proceeds of any invoice paid online are transferred to your transaction account and are normally available the next day. You can also manually record any invoices paid on the same dashboard.
3) Get clients to pay early using incentives
No matter how you set up your invoicing, payment terms should always be clear. Some of the most common invoicing payment terms include:
- Due on receipt
- Net 30
- Net 60
- Net 90
Incentivising early payment can help motivate stragglers who wait till the 30th, 60th, or 90th day to make payment. For instance, with an invoice payment term of Net 30, if the client pays within five days of receiving the invoice, offer incentives to reward this behaviour, such as:
- A percentage off the next invoice
- Discount on the next product or service purchase
- Gift card for a community shop, such as the neighbourhood café
While offering discounts and credits, most customers will jump at the chance to pay early. But you’ll still have those who wait till the last minute or worse—they pay late. In addition to an incentives program, you can also penalise late payments with a late fee. Make sure you disclose the fee on your invoice and in your terms and conditions.
4) Start using instant transfers
An easy way to transfer and access funds is with Square instant transfers. As the name implies, you can transfer your funds instantly as soon as you’ve made a sale. Instant transfers are available anytime, even late at night or on the weekend. Just tap ‘instant transfer’ in the balance section of your Square app or Dashboard to send funds to your linked account within minutes. Transfers cost 1.5% of the total transfer amount. You can use Instant Transfers when your Square Balance is greater than $5.
5) Generate new clientele
Managing cash flow is one thing but improving it is another. There are many ways that you can generate new clientele for your business whilst managing your cash flow. For example,
- Ask your checkout team to offer add-on products to customers at the counter.
- Send out emails with discounts for your most loyal customers. Square’s email service makes sending customer emails a breeze. You can also divide your customer base into segments and send tailored messages. In addition to discounts or other rewards, you also offer information on upcoming sales, upcoming new products or services, or gifts with certain purchases.
Find out how Square can help your business streamline cash flows here.
Instant transfers require a linked, eligible bank account and cost a fee per transfer. Funds are subject to your bank’s availability schedule. Up to $5,000 AUD per day. The minimum you can transfer is $5.