F&B Business: 8 Strategies To Improve Your Business Cash Flow
Cash flow is one of the cores of your business operation. Good cash flow means the business is successfully running and growing.
It is vital to note that anything can affect your cash flow. This means one should carefully manage all expenses.
In any business, profit is important, however, making sure that the business stays afloat is equally important too.
How can you improve sales and decrease expenses? How will your business stay competitive in a market where offering the cheapest option is necessary?
You are in luck! We have compiled 5 practical tips to help you improve your cash flow and ensure the business is right on track.
1. Send Invoices Immediately
Undeniably, the bread and butter of small businesses are sales. When it comes to sales, invoices come next. No payment will be done without invoices.
Make sure you stay on track when it comes to invoicing your customers. The quicker you send invoices out, the faster the cash comes in.
If your current invoicing process is tedious, consider switching to a cloud-based accounting software with attractive, easy to create invoices. (Check out Dropee’s Enterprise Solution here.)
2. Make Sure Customers Pay Invoices On Time
One way to increase your business cash flow is to get the customers to pay invoices on time. This indeed can be quite a challenge but it does make a huge change in one’s business.
3. Follow Up With Invoice Reminders
Always make sure to send a reminder to your customers when their invoices are due. Send email or SMS reminder a few days before the invoice is due, the day the invoice is due, and a few days after.
If the customers still haven’t paid, give them a follow-up call and continue sending the reminders to them. Many programs have built-in invoice reminders that you can use automatically to send out to customers who are late in making payments.
4. Give Your Customers Incentives
Be open in giving out promos and discount to customers who make payments on time or immediately.
Offer a minimum discount for customers who extends their way in paying on time because this will encourage them to pay early next time. It also foster a good relationship with your customers.
5. Consider Price Increase
If you are struggling with your cash flow, it may be time to consider increasing the prices for your products or services. Try asking yourself;
What are the competitors’ prices?
Are prices for equipment or inventory increased or decreased?
Are my prices too high or too low?
Do my products shown as cheap or valuable in the market?
Sometimes, you need to strike a balance between keeping your prices competitive but at the same time, fairly compensating the hard work you and your employees put in.
At the end of the day, your goal is to earn revenue, sales and profit. But don’t sell yourself short by making your prices very low. This is a bad decision. Customers might get the impression that your business is less qualified and offers poor quality.
6. Sales Market Expansion
Another solution to increase positive cash flow is to brainstorm new sources of income. Get the dream team together, sit down with some coffee, and consider new ways to expand your sales market.
7. Add New Services Or Products
Think about the current items or services that you offer and consider if there are other items or services that you think would be a good addition to your business.
Always think outside of the box and consider other options and ways to earn income and profit.
As suggestions, for F&B businesses, you could start offering a special seasonal menu or add on values such as reward point collection for example. This will improve the customer’s loyalty and earn you more recurring customers as well.
8. Operating Expenses Re-evaluation
To manage cash flow is not just about getting plenty of cash to come in. It’s also necessary to minimize the cash going out/ expenses if possible.
Re-evaluate your cash flow and eliminate unnecessary expenditure that you can do without (e.g. subscribing for unused software, keeping dead stock, etc.)
Have a closer look at your cash flow statements and make an analysis of your business expenses. These two questions can be useful:
Are these expenses necessary?
If these are necessary, can I get a cheaper option?
Always be careful of all of your current expenses. Strike out all of the unnecessary expenses and always strive to decrease the necessary expenses as much as possible.
All of these tips can help you manage and increase your cash flow. Whether you decide to focus on increasing your sales, decreasing your expenses, gaining capital — or a mix of them all — you’re well on your way to increasing your cash flow and running a more successful business.
If you’re looking for ways to improve your cash flow, then Dropee might have a solution for you!