As a small business owner, managing your business’s cash flow is tough, but it’s something you must do to keep your business afloat—and avoid 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 four tips for handling cash flow problems.
1) Monitor your cash flow.
Do you currently have a real-time grasp on the amount of money that comes into and goes out of your business every month? If not, that’s where you need to start—knowing 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.
One of the aspects of cash flow management that many business owners struggle with is separating their personal finances from their business expenses. Square now offers Square Card so business owners can have real-time access to their funds as soon as they make a sale. Business and personal transaction labels in your Square app make it easy to keep your business expenses separate from personal expenses. Using your Square Card is quick, easy, and makes it free to access your funds.
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Transfer your funds on your schedule, with little or no fees, with instant transfers.
2) Take your invoices online.
If you don’t already use online invoices, you’re missing out; online invoicing allows you to track your billing activities all in one place. 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.
Using Square Invoices lets you easily create and send an invoice, as well as see which invoices have been paid and which are still outstanding. The proceeds of any invoice paid online get immediately transferred to your chequing account and are normally available within a couple of business days. You can also manually record any invoices paid in person or by mail 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
Incentivizing 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 behavior, such as:
- A percentage off the next invoice
- Discount on next product or service purchase
- Gift card for a community shop, such as the neighborhood 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 penalize late payments with a late fee.
4) Start 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, 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 in an instant. Transfers cost 1.5% of the total transfer amount. You can use instant transfer when your Square Balance is greater than $500.
5) Generate new clientele.
Managing cash flow is one thing—improving it is another. But it’s basically improving your sales. For instance:
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.
Managing cash flow is simple. Ask how Square can help.