Miss the other articles in the series? You can read them here!
We saved the best for last and for our fourth installment, we’re providing a whopping 7 best-practices to help you manage and optimize your business’s cash flow.
- Client incentives and discounts
- Themed sales promotions
- Hosting events
- Improving sales processes
- Up-selling current customers
- Offering multiple payment options
- Purchasing major fixed assets
Let’s examine these strategies further:
- Client incentives and discounts
Just like when we examined our own books for potential vendor discounts that could positively impact our cash flow, we can offer client incentives and discounts on both products and invoices. The sweet spot seems to be a 2% discount if paid in 10 days on a net 30.
Sure, you’re giving 2% off but you’re also receiving your funds a whole 20 days faster than you would if you hadn’t offered that promotion. Great for cash flow and turnover!
- Themed sales promotions
By creating themed or bundled promotions you can offer your customers more of what they need while getting them to try more of your offerings. Be sure to completely WOW them with what you offer so that even when the promotion is over, you’ll have a returning customer for life.
- Hosting events
Hosting events (and virtual events) is not only great for your customers looking to learn more about your operation, but it’s also particularly interesting for members of your industry. You might convert a competitor’s curious customer into one of your own simply by providing information and wow-ing them with your customer service and industry knowledge.
- Improving sales processes
This is a surefire route to better cash flow. A more consistent and proven process for leads, sales, and aftersales (instead of firing at the wall and seeing what sticks) is a way to generate a constant stream of cash flow you can come to rely on.
Remember though, a process is only as good as the sales team implementing it. Your head of sales should be training and monitoring salespeople and their techniques in order to optimize these processes.
- Up-selling current customers
Up-selling is similar to our bundling strategy from the last article, but it’s important to note that it is NOT THE SAME! 🙂
Up-selling involves reaching out to current customers or sifting them into automated campaigns in order to sell more products to them. There is a fine art to this since not all customers are the same and have likely purchased different products from your business.
Someone buying a $20 baseball cap probably doesn’t want a $200 fedora (just an educated guess). But they might want a $70 baseball jersey. Use your insights and common sense to segment your customers and up-sell them on items or services they’ll actually want.
- Offering multiple payment options
Only accepting checks and debit? Prepare to join the list of businesses that closed in 2020.
We don’t say this to be harsh… we say it to inspire you to offer more methods of payment. Sure, credit card companies take a cut of the profits for processing, but they need to stay in business too!
An easy way to offset this cost is by increasing your rates, by the way. Chances are a 1-3% increase to cover fees and/or inflation won’t make or break a deal with your customers.
- Purchasing major fixed assets
Reduce, reuse, recycle… true for the environment, true for your business. Try to delay the purchase of major fixed assets for as long as possible (or don’t purchase them in years where the overall economy is struggling and you might not be making as much).
If you can’t delay the replacement or purchase of a major asset, try to lease it (or buy used!). Sure, it costs a bit more to lease, but you won’t be stuck covering things like maintenance or repairs and the impact of a leased asset on your books (and cash flow) is way less substantial than a huge purchase.
