The current outbreak of the pandemic has shaken up the business community for good. While some businesses have shifted their operations and adjusted to the changing world, some have had to shut down.
However, sustaining the business and making a constant income is always a challenge for small businesses. One of them is paying back the funds to the creditors. However, what to do if the cash available is inadequate? This is where we step in.
There are various ways to reduce the operational expenses of your business, boost cash flow, and eliminate the stress of not being able to pay your debtors.
Here are few suggestions to reduce costs and boost the cash flow in your small-scale business.
Assess Your Service Providers
Consider reviewing all operating costs, services, and overhead expenses. Do you really need all these services or products that you’re currently paying for? If yes, try to look for some cheaper alternatives.
Take a look at your internet expenses, phone, electricity, and insurance providers and compare them with other providers to look for better rates. You can also ask the current providers to match the offers of competitors or change to the provider with a better offer.
Also, assess the services outsourced by your company. For instance, if you have hired an accounting firm to manage your book-keeping, instead, check if you could handle some of the work within the company or employ a freelance professional to handle low bandwidth work that you usually pay highly to the outsourced agency.
Moreover, getting into a copyright or trademark dispute can also drain your operating funds – we’re sure you do not want that. This is why it makes sense to have technology lawyers around to help avoid such costs, should something legal happens to your business.
Negotiate Better Terms With Your Existing Suppliers
See if you’re paying too much to your suppliers. Try to negotiate lower rates or consider buying bulk inventory. You can also take advantage of bulk purchase discounts offered by your suppliers.
Moreover, talk to your suppliers for payment extension to avoid the short-term bottlenecks in cash flow. Find alternatives when you can’t agree on better rates and terms from your existing suppliers.
Consider Working Remotely
After the pandemic outbreak, work from home is now a new normal. While it may pose some difficulties with work, it significantly cuts the cost of business by substantially lowering the company’s costs for power, rent, and other office costs.
Additionally, it gives you access to people who are proficient at working remotely.
Automate Labour Intensive Tasks
An effective cost-cutting strategy to increase productivity is to cut down on the time and cost of work-intensive tasks.
Try to automate the book-keeping process by using accounting software to reduce costs and time, and human error and increase cash flow with efficient billing strategies.
Optimise Your Workforce
Though this may sound a bit harsh from the employer’s perspective, understand that you have the business to run. Too few or too many workers can take a hit on your profits, plus you’ll have a hard time managing them. That is why it makes sense to reorder your staff.
Try to reform and streamline employee roles in areas where they are not being utilised. Make sure that the changes align with the goals of your business. Identify the employees crucial to your company’s growth and figure out ways to keep their position in the new structure.
Seek Discounts and Avoid Late Fees
Late fees paid for loans and bills imposes an undesirable financial burden on your company. Ensure to implement measures to control the cash flow, including payment automation and scheduling payment due reminders.
Check if you can get some discounts by making early payments or switching to payment options that permit you to pay yearly instead of monthly instalments. The idea of paying bills in advance or early when you have cash flow could benefit your company.
The Bottom Line
The COVID-19 pandemic has made it tough to operate businesses, especially for small-sized firm owners. Though the cases have decreased to almost nil in Australia (fortunately), businesses still have to work hard to speed.
Make sure to take cues from this article and optimise cash flow for your business for sustained growth.