As the UK economy began to recover tentatively from the impact of the coronavirus pandemic in February 2021, it was notable that half of all businesses that had temporarily ceased trading reported cash reserves lasting three months or less.
This figure highlights the growing cash flow challenges facing businesses in the modern age, with many struggling to boost their coffers in the face of rampant inflation and continued economic uncertainty.
But what sensible steps can you take to boost the flow of cash in your business? Here are some ideas to keep in mind:
#1. Consider Leasing
Depending on the nature of your business, you may want to reduce long-term costs and optimise your cash flow simply by considering the benefits of leasing.
For example, you could look at organising short-term leases on commercial premises or temporary pop-up venues, rather than committing to extended agreements that impact negatively on the value of your cash holdings.
On a similar note, you may want to consider leasing key items of equipment that are required to manufacture products.
This negates the need to buy such items outright, minimising short-term costs and optimising the level of capital in your venture in real-time.
#2. Evaluate Your Spending and Embrace Digital Payments
When you’re running a small business and attempting to manage every single element, it’s all too easy to lose track or sight of small (and potentially recurring) payments.
This can cause you to spend more than necessary over time, so we’d recommend regularly evaluating your company’s budgets in detail and eliminating unnecessary or overly expensive costs company-wide.
You may also be able to identify areas of inefficiency when it comes to spending and completing payments.
To overcome this, you should consider embracing advanced digital payment systems that are managed online and capable of securely authorising real-time payments.
#3. Streamline Your Inventory
If you operate a product-oriented business, the chances are that you’ll own at least rudimentary warehouse space and a fixed volume of stock.
This stock can tie up a considerable amount of working capital in your business, with this issue exacerbated in instances where you’re holding onto products that aren’t shifting off the shells.
Selling this stock at a reduced margin can minimise your financial burden and release some much-needed capital into your venture, while deeper analysis of your inventory can help you to manage this more effectively going forward.
The key is that you’re proactive when buying and managing stock levels, and regularly review your inventory in detail.