Seven ways to get your cash flow flowing

Strong cash-flow is the trick to any successful ecommerce business. Here are seven ways of keeping your cash flow flowing.

By Jason Hesse, eSellerMedia.com contributor

1. Stay on top of your cash-flow

This is without a doubt the most important tip: be disciplined. Cash flow is the most important element in your business. You have to take a hands-on approach and keep your cash flow forecasts updated. Know what’s coming in, what’s going out and what the time frames are.

2. Invoice as soon as possible

This may be an obvious one, but all too many businesses neglect to invoice as soon as possible. Luckily, many ecommerce businesses get their cash up front, but it doesn’t mean you can’t invoice more quickly. This is relevant to repeat customers. Your cash flow could be much better off if you would bill them immediately.

You could even consider arranging to invoice them at the beginning of each month for that month’s work, effectively improving your cash flow by 30 days!

3. Win more business

Get more customers to buy from you. Again, this seem obvious, but it’s a healthy cash and cultural change. If you rely too heavily on a handful of clients, and they pay late – or not at all – the impact on your cash flow is massive. Make sure you have a large client base, even if it’s made up of several smaller clients.

4. Be friendly with your bank

Of course you already know to be friendly to your clients and debtors, but don’t forget to have a good working relationship with your bank, too. This means that if you’re in need of a temporary overdraft to cover your cash flow, they’ll have plenty of warning and you know they’ll be able to help.

5. If you don’t ask, you don’t get

Many ecommerce entrepreneurs are reluctant to chase payments. But you’ll be surprised how easy it is to get your invoices paid. So don’t be afraid of picking up the phone. If you get in the habit of tracking and following up all of your invoices, it will drastically help to get your cash flow flowing.

6. Chase by phone

Make sure that when you’re chasing unpaid invoices, you chase by phone rather than latter. Credit reference agency Graydon estimates that phoning is 80 per cent more effective.

7. Lease instead of buy

Your ecommerce business may need a new IT system. When you look at your bank balance, you decide that you’ve got the spare cash to spend on a new server. But think twice before parting with your pennies – consider leasing instead of buying equipment outright.

It is a much more effective way of acquiring equipment. Remember the old adage: “Never buy what you can lease, lease what you can rent, rent what you can borrow, or borrow what you can find in a skip.”