With insolvency on the rise (the number of UK businesses claiming insolvency in 2022 was at its highest level since 2009), here we look at 5 quick ways to boost business cash flow instantly.
Cash flow refers to the amount of money that comes in and goes out of a business, and it’s essential to keep it positive for your business’s survival and growth. Here are five quick ways to boost business cash flow instantly:
- Offer Discounts for Early Payment
One way to boost cash flow is by offering discounts for early payment. This can be an effective way to incentivize customers to pay their invoices earlier than usual. Offering a small discount, such as 2-3% off, for payments received within a specific timeframe can encourage customers to prioritize your invoice and pay it sooner.
When implementing this strategy, it’s important to communicate the terms and conditions clearly to your customers. Make sure you highlight the benefits of early payment, such as saving money and improving their credit score. Additionally, set a clear deadline for the discount to expire, so customers know they need to act quickly.
- Negotiate Payment Terms with Vendors
Another way to improve cash flow is by negotiating payment terms with your vendors. Often, vendors will offer discounts or extended payment terms if you pay your bills earlier than usual. By negotiating these terms, you can reduce the amount of money going out of your business and free up cash flow for other purposes.
When negotiating with vendors, make sure you understand the terms and conditions fully. If the vendor offers a discount for early payment, make sure you can meet the deadline and take advantage of the discount. Similarly, if you negotiate extended payment terms, ensure you can meet the new deadline without jeopardizing your cash flow.
- Sell Unused Assets
If your business has unused assets, such as equipment or inventory, selling them can generate additional cash flow. This can be especially useful if you have older equipment or inventory that is no longer needed or has depreciated in value.
To sell unused assets, you can use online marketplaces or auction sites to reach a broader audience. Alternatively, you can work with a local equipment or inventory dealer who specializes in buying and selling used assets.
When selling unused assets, make sure you understand their market value and price them accordingly. You may need to invest some time and effort into cleaning and repairing the assets to get the best price.
- Offer Subscription Services
Offering subscription services can be an effective way to generate consistent, recurring revenue for your business. By charging customers a monthly or annual fee, you can create a predictable cash flow stream that can help stabilize your business’s finances.
To implement this strategy, you need to identify services that customers are willing to pay for on a recurring basis. This can include products or services that customers use regularly, such as software, training, or maintenance services.
When developing your subscription service, make sure you price it appropriately and offer clear value to your customers. Communicate the benefits of the subscription, such as cost savings, convenience, and access to exclusive content or services.
- Claim R&D Tax Credits
Finally, one of the most effective ways to boost business cash flow is by claiming R&D tax credits. These tax credits are designed to incentivize businesses to invest in research and development activities that can lead to innovation and growth.
To claim R&D tax credits, you need to identify activities that qualify for the credit, such as developing new products, processes, or services. You also need to document these activities thoroughly and prepare a detailed claim that outlines the expenses related to the R&D activities.
Working with a specialist R&D tax credit advisor can help ensure that you maximize your claim and receive the full benefit of the tax credit. This can provide a significant boost to your cash flow, which you can reinvest in your business to drive further growth and innovation.
I have worked alongside many clients to process their R&D Tax credit claims, and always use the same consultant firm – they have consistently helped to advise on qualifying projects, and are supportive/helpful throughout the whole process. To find out if your project could be eligible, sign-up and answer some questions about your project here.
In conclusion, managing cash flow is critical to the success of any business. By implementing these five quick ways to boost cash flow, you can free up cash to invest in your business and drive growth.
These are trying times for small businesses across the Country, with many under more financial pressure now, than they have ever been. So I do hope these tips help to ease the difficult times and allow you to navigate your business to a bright future.