Generating cash flow is good, but having consistent cash flow is crucial. It determines how long you’ll be in the market. How? Cash flow is the amount moving in and out of your business daily, weekly, monthly, or yearly. When you don’t have enough liquid to cover emergency costs and other revenues, it puts your company in danger of bankruptcy. In fact, 82% of businesses fail because of cash flow mismanagement.
You, therefore, have to find ways of balancing cash flow to ensure consistency and thus avoid putting your e-commerce business out of the market. How do you do this?
Tips for using to ensure consistency cash flow
There is something you need to remember. Although you do business online, which reduces delays in account receivable, the time which customers take to pay you is unpredictable. So, you may have products but less cash to keep your operations booming. Here are some tips to help you sail safer and keep your business running.
1. Manage your inventory
When it’s that time of the year when it’s challenging to sell items, it’s essential to avoid having surplus products. Check the things that are holding dust and cancel future orders of the same. The prices of buying stock in bulk for a discount are attractive. But, avoid such scenarios as they leave you with more products in your store, yet you don’t know if they’ll move.
In other words, regulate your stock as it comes in handy when you want to expand your business. How? Lenders not only check your credit history but sales history too.
2. Improve how you sell products
You’re probably doing everything to drive traffic to your website. Nonetheless, it’s essential to entice those leads to buy what you’re offering. How do you do that? Consider offering bonuses to people who buy more products and other rewards.
For instance, you can offer free shipping of products to customers who buy products worth a certain amount if you engage with cheap parcel delivery. Why? First, it won’t cost you much. Secondly, both you and the buyer will benefit from the fast supply as it will leave a positive review on your web, and the client will be happy.
3. Talk to your supplier
If you have a long-term supplier, consider negotiating with them to increase the payment schedule. If the vendor can allow extra days, take the deal. However, this will work if you have a good relationship with the vendor. How will this help?
Holding onto cash as you wait for online customers leaves you with enough to attend to an emergency. If you’re given 90 days to make payment wait until a few days before the deadline. However, if the supplier is offering discounts when you pay earlier, consider it.
4. Allow multiple payment modes
Suppose your business allows visa card payments only. Only those that have them will use them, restricting other potential buyers who don’t have the card. So, implement other payment methods like PayPal, credit cards, and others.
5. Assess your expenses and reduce some
Your e-commerce business needs advertisement fees, utilities, and other legal fees. Assess each fee and reduce where possible. For instance, you can minimize advertisement fees to prevent cash outflow and ensure you’re remaining with enough in your hands.
The above five tips will help you manage cash flow ensuring business growth even during tough times. Consider implementing some or all and observe changes in your company as they occur.