5 essential steps to improve your SME’s cash flow

As a small business owner, it can often be challenging to manage your company’s cash flow. If your business’ cash flow is a source of anxiety for you, consider these helpful tips:

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1. Give your customers multiple payment options
While waiting for substantial payments to come in, it’s common for SMEs to struggle with tight finances. As you consider ways to improve your cash flow, it is a good idea to ensure it is as easy as possible for your customers to pay you. This means offering an array of convenient payment options, whether by accepting credit cards, debit cards, digital wallet payments and more. Other options include DBS Paynow Corporate, MEPS, FAST and GIRO which allow customers to pay you conveniently and securely. The easier it is to pay you, the quicker you’ll receive the cash you need.

2. Review your terms of payment
It may seem like a no-brainer, but it’s often easy to overlook that your payment terms may be causing problems with your cash flow. For example, if you have a 30‐day window to pay your suppliers but only require your customers to pay you within 60 days, you might find your business cash‐strapped during specific periods. A quick way to prevent such situations would be to match your company’s payment terms with that of your suppliers. Consider implementing late payment charges to encourage your customers to make timely payments, so you don’t have trouble paying your own suppliers on time. You might also want to consider using software such as Tipalti or Chargebee to manage your supplier payments.

3. Be innovative with your sales model
Get creative with the way you sell – If you’re in retail and find you are buying goods that are moving significantly more slowly than other products, make the effort to clear your stocks, even if it means offering discounts. This will free up your cash to purchase faster‐moving products that are constantly in demand. If you’re in a service‐based industry, consider offering subscriptions or period‐based contracts that provide recurring income. Or, consider promotional prices for new customers or on premium services for existing customers.

4. Review your operating expenses
Managing your cash flow isn’t just about ensuring more money is coming in; it’s also about reducing the amount of money your business is spending. It’s good practice to take stock of your company’s operating costs – are there cheaper alternatives that you can use, or can you make your business more efficient? Outsourcing some business functions may help you minimise costs associated with overtime wages, and lead to greater employee productivity.

5. Take out a short-term loan
Another option to boost your cash flow is to take out a short‐term loan. While taking out a loan might seem like a last‐ditch resort, there are situations that could justify it – for example, if an opportunity arises to expand your business, take on a lucrative project, buy new inventory and more. DBS offers an array of loan options for small businesses to take advantage of.

Need ideas on how your company can boost its cash flow? Speak to a DBS Relationship Manager today.

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