On this page
- Marketing activities to improve cash flow
- Dealing with your customers effectively
- Managing suppliers and stock for improved cash flow
- Staffing and cash flow
- Further tips
Marketing activities to improve cash flow
- Ensure you know your target market and potential customers within that market:
A more focused target market results in less marketing expenditure, and more clarity for potential customers in that market where sales can be directed to.
- Understand what problems your product or services solves for your customer:
The more you know about what the customer wants, the more likely you can define – and meet – their needs.
- Keep your marketing regular:
This is critical – if you promise a monthly newsletter, then deliver on that promise.
- Measure your marketing results:
Know where your customers are coming from – so you can refine your marketing spend to the most successful marketing tools you use.
- Keep a data base of your customers:
If you know how to reach your customers and understand their buying habits, you can develop marketing activities to encourage returning .
- Bundle your sales:
Provide offers that move stock more quickly – bundle products or services to increase sales value of each sale.
- Answer every phone call:
If you're too busy to answer your business phone, are you too busy to be in business?
- Follow up on every enquiry:
Research suggests that 45 percent of all enquiries are converted into a sale, so if you're not achieving this benchmark, put processes in place to make the sale.
- Value your current customers:
Evidence suggests it costs from 6 to ten percent more revenue to attract new customers than it does to sell to existing ones – maybe you need to focus on your current customers first?
- Invest in online marketing:
Many websites are developed with information of the business and not much else. You need to entice the customer to buy, so there needs to be some 'hook' or 'call to action' for them to contact your business.
Dealing with your customers effectively
- Invoice quickly:
Deliver products as soon as they're ready, and invoice when the sale is completed. Learn how to prepare an invoice.
- Request a deposit:
For special or large orders – request a deposit.
- Provide easy payment options:
Give your customers a variety of payment options, such as credit card payment and direct deposit into your bank account.
- Provide payment incentives:
Provide incentives to pay early – such as a discount – but make sure you don't eat into your profit too much.
- Outstanding payments:
Have a process in place to follow up outstanding payments regularly – visit our page on debt recovery to find out more.
Have processes in place for quick resolution of customer disputes that can hold up payment.
Managing stock and suppliers
- Use supplier terms:
Make full use of your terms of trade as this equates to an interest free loan.
- Move aged stock:
Replace slow-moving and obsolete stock with stock that has a faster turnover.
- Monitor stock levels
Track the movement of your stock and have processes in place to identify when new stock should be ordered.
- Just in Time stock orders
Find suppliers who'll provide you with stock only when you need it – that way you won't waste money paying for stock that's sitting in the warehouse or storeroom.
Staffing and cash flow
- Flexible staffing:
Match the roster system to the peak periods, and have flexible staffing arrangements in place.
- Sales commission:
Only pay commission to your sales staff when the payment is received.
- Reward staff:
Reward staff behaviour that improves cash flow, such as setting sales targets, reducing expenditure or paying commission on collection of payment from customer.
- Sell unnecessary assets:
Many business accumulate assets they no longer require. Selling unnecessary assets increases cash in the business and saves on costs, such as insurance and storage.
- Buying assets:
If you need new assets, consider leasing to 'smooth' out cash flow if appropriate.
- Prepare regular cash flow forecasts:
Cash flow forecasts help identify any potential cash flow shortages in the immediate future. Once you've prepared a cash flow forecast, run 'what if' scenarios to measure how reactive your cash flows will be to certain changes in events, such as decreases in sales.
- Invest surplus cash:
Use interest bearing bank accounts for any surplus cash your business may have.