Reduce your vulnerability with these simple tips
With so many banks limiting the amount of money that is being lent to their customers, how can you ensure that you are reducing your vulnerability so you don't need to rely on credit to get by? There are a lot of things you can do that will keepyour business running the way it should, which means you won't end up with your cash flow in the red.
Keep gaining new customers
When you fail to market, you fail to diversify your company. You need to do everything possible to try and gain new customers so you aren't relying heavily on the customers that could fail in this bad economy. Small businesses often "hook up" with some great clients that have big wallets but if you fail to attract new clients and only rely on them, you will hurt your company significantly. You need to look for ways to keep attracting new customers in order to make sure your income is diverse and that you can acquire it from multiple sources, not just one person or one client. Branch out to new industries that you have yet to market to. This helps you to gain new customers and to build your reputation with more exposure.
Trim your expenses
If you notice a dip in sales because your customers just don't have the money to order your products, look for ways to trim your expenses. You need to cut the excess spending from your cash flow such as buying expensive office supplies and other things that you don't need. Watch for centers that offer recycling for ink and toner as they will usually give you a discount on a new purchase, which is a great way to save money.
Work with your vendors
Customers that fail to pay you on time will impact your cash flow, making it much more difficult to pay your vendors on time. Work out payment arrangements with your vendors like extending to Net 45 versus Net 15. Having an extra 15 days to try and collect the funds from your customers will really helpyou out so you don't end up having too many problems with your vendors and it can help you to control your cash flow a little better.
Cut your credit card acceptance
There are some credit cards out there that charge small businesses higher fees for accepting their payment method. Visa and Mastercard are the least expensive so you might want to look into dropping Discover card and American Express to save on the costly fee amount.
Boost your collections
To make sure you aren't struggling to get by, you need to step up with your collection policy. Don't let your customers take advantage of you by waiting months to pay their bills. Start sending out invoices as soon as they have ordered the product and then follow up with them in a couple weeks to see if they can pay their bill.
Another way to make your customers pay is to start requiring a deposit from your customers right away. This will make them pay their bill right when they order the product so you aren't stuck trying to eat the extra costs while they wait 2 months to pay you.
Charge interest on late payments. This is a simple way to install a sense of urgency in your customers and remind them that they need to pay on time or they will face a fine. You can also reward the customers that take the imitative to pay their invoices early. Reward them with a discount on a future order or offer them a small product as a gift. It's a great way to show your customers that you appreciate their timely payment.