In this economy, businesses need to get more efficient and creative about ways to pump up their cash flow. Here are some suggestions to help you get inspired to think of new ways to improve your bottom line.
1. Increase customer throughput
One of the best ways to better your business is to increase revenues. Look at your overall process including how fast you get customers served. Bricks and mortar stores should be designed to get customers through check-out faster. How recently have you reviewed your design? Are there new technologies you can leverage in this process? This doesn’t mean you need to have hand-held devices for roaming clerks to process check-outs like in the Apple store, but rather look at any bottlenecks you have, however small and address those.
Service organizations could review the sales cycle focusing, for example, on the proposal process. Are there changes in the workflow that could streamline the operation such as staggered schedules for salespeople so that proposals are delivered in a more-timely manner. A company working 6am-9pm may be able to respond more quickly to standard proposals if your sales force works as a team. And many employees appreciate a staggered schedule 6am-3pm for early-birds versus noon to 9pm for night-owls.
2. Collect receivables faster
It’s always easier to confirm payment terms at the start of your relationship and make sure you follow through. If your terms state “net 0”, make sure you follow up with non-payers promptly. Waiting to call on outstanding receivables implies your terms are more flexible. Getting this established at the beginning of the relationship puts everyone on the same page as it relates to expectations. One technology aid would be to use electronic software like Quickbooks. The cost is relatively small for the software (cloud based software is even cheaper initially, but more on that in a later article) and having instant access to who owes you what from when is critical. Another easy-to-make change is to email your invoices. You save on postage and with a “read receipt” enabled you may be able to monitor that your client received and read it. And we all have clients who have so much paperwork they are slow to process your invoices through their accounting department. For those clients, it may be possible to enlist the help of client’s staff by sending the invoice to multiple recipients (including Accounts Payable for example) as an additional in-house resource aware of your invoice and payment terms.
3. Revisit service provider and vendor relationships
This gives you the chance to look at what’s working and what’s not. Say, for example, you order in bulk from a vendor to get a big discount but lack the room to store the material, storage costs can eat into that discount. Instead, try working with the vendor to get the order in place at the discounted price with partial shipments periodically scheduled to minimize your storage needs. Some vendors don’t advertise this option, but will do it if you ask. Just make sure you inform your accountant of this arrangement so the proper accruals can be made for timing differences in year-end accounting.
Another example is when you sell product that needs basic assembly, try establishing a relationship whereby the vendor stores the materials from different sources, assembles the kits upon request and then drop ships directly to your clients.
These are of course only a few suggestions to what might work for some businesses. Each situation is unique, but hopefully this has inspired you to look at your business from a new angle to make the changes that will work in your environment and add to your bottom-line. Happy hunting and look for another 3 ideas coming soon…