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Regardless of the size or type of business, having problems with cash flow is a major concern. Even if a business is currently profitable or showing strong projected growth, if expenses are not covered, the growth may be stunted long-term.

Want to improve your working capital? Here’s how to increase cash flow in your business in eight different ways.

Business Cash Flow1. Come up with a cash goal and supplement it with a cash flow projection

Proactivity is the name of the game, so begin with setting a clear cash goal. It is vital that you are aware of the funds required to take your business to where you desire, or to place it in the competitive position it needs to be. Do this by carrying out a cost analysis and establish your break-even point well in advance. Every month, complete a profit and loss statement, a cash flow statement and a balance sheet – these three documents will give you an in-depth view of the health of your business finances, allowing you to prepare for the inevitable highs and lows of cash flow for the coming months.

2. Add a ‘PAY NOW’ button to your emails and invoices

A quick tip of how to improve cash flow quickly is to make it easier for your customers to pay you immediately. A ‘Pay Now’ button can be added to invoices and emails, meaning customers are one click away from payment. This simple button that links to your online payment platform is very convenient, and features in many accounting software programs, and can even be created yourself.

3. Use Key Factors factoring financing to bridge the gap of slow payments

Factor Financing is a flexible way to quickly boost your cash flow by allowing you to turn your sales invoices into cash – fast. Forget waiting 30 to 90 days for your clients to pay and recruit the help of Key Factors. With Key Factors factor financing you can get up to 80% of the invoice value in as quick as 4 hours. The remaining 20% less any accrued charges are made available once your client pays us.

4. Become more efficient

With a variety of tech tools available online, it’s never been easier to streamline your business dealings to become more efficient. E-commerce sites, accounting software and smart-phone enabled credit card readers are just a few tools that can save your business both time and money. Use technology to your advantage – for example, conduct international meetings over Skype conference calls instead of paying high travel costs.

5. Find ways to reduce costs

When thinking about how to increase cash flow, if you can’t increase profit, why not find ways to reduce costs? This can go a long way especially for ongoing monthly bills like phone, internet and electricity. Are you certain you’re getting the best deal? Call and negotiate with your providers and you’ll find that often you can receive a significant discount simply by asking, as a reward for consolidating costs or being a loyal customer.

6. Condense all outstanding invoices into one statement

In the case of a customer having a number of multiple invoices open, encourage fast payment by consolidating these documents into one. Having one clear invoice that specifies the total amount owing (as well as a breakdown that details the dates, goods and services purchased) makes it easier for your customer to confirm exactly how much is due, all whilst avoiding having to fill their inbox with numerous overdue statements.

7. Review your prices

When was the last time you reviewed your pricing model? It’s important to fine-tune prices every so often to ensure you’re not selling your goods/services for too little or too much. Cash flow can be boosted by increasing prices, however if you do, make sure the increase is justified by considering what you can add to your products to raise their value in the consumers eyes. Sometimes, the perceived value of products can be raised simply by a price hike.

8. Chase up outstanding payments in a timely manner

In the case of outstanding payments, don’t delay – follow up your clients with polite but firm reminders, remembering to always remain professional whilst doing so.

As apart of our factor financing service, Key Factors will follow up on outstanding accounts on your behalf. We will also send your customers statements summarising the total amount due as a friendly reminder. Our factor financing service not only boosts your business cash flow but can save you time and resources, allowing you to focus on what you do best which is growing your business.
Want to know more about factor financing and how to increase cash flow in your business? Contact us at Key Factors, on 1300 884 100 and a local state manager will be more than happy to discuss your needs and provide you with a quote to suit your requirements today.

One of the most challenging parts of running your own business is the unpredictability. Unlike being an employee with a fixed salary, there are many moving parts that can affect your cash flow. Late-paying clients, unexpected expenses, ebbs and flow in customer demand — all of these things can make paying your bills, employees and contractors on time a constant struggle. When there’s so much uncertainty around your incoming payments from clients, it can be nearly impossible to look to the future and grow and scale your business. Thankfully, there is a way that you can make your cash flow predictable, reliable and regular again. Read on to learn how to forecast future cash flows with factor financing.

What is factor financing?

Cashflow Finance For Small Business

Factor financing is when a financial institution or funding source pays a portion of your client invoices up-front. Other names for it include invoice financing, debtor financing, invoice discounting and cash flow financing. The business sells its accounts receivables to a third party (called a factor) at a discount, in order to get access to immediate cash. It can improve your working capital by drawing funds against your unpaid invoices.

When you use Key Factors for factor financing, you invoice your client, then send it onto us. We then pay up to 80% of your funds in as little as 4 hours, with the remaining 20% minus any accrued feeds to be released when your client pays us. The cost of factor financing can vary depending on the factoring company. Usually, a flat factoring rate is applied which will determine the factoring fee. At Key Factors, we only charge a flat daily rate on what you use. There are no ongoing monthly admin fees or annual charges associated with Key Factors’ invoice factoring service

How does factor financing help forecast future cash flow?

 

Factoring is an indispensable strategic and financial resource when it comes to forecasting future cash flows. While surprises can be nice when they involve fun things like flowers, cake or puppies, this certainly isn’t the case when it comes to your finances.

For example, if you have just started working with a new customer or client, it can be difficult to know how cooperative they are with payment terms. Without using factor financing, a business could be left waiting 30, 60 or even 90 days for this client pay. This may leave them completely blindsided and leave them unable to pay outstanding debts — let alone invest in more things that are going to drive their business forward.

Key Factor Perth

On the other hand, businesses that use factor financing know exactly how much they are going to get paid and when. Having a more predictable cash flow will allow you to take on more work, hire more staff and grow your business.

Factor financing is not only pivotal for forecasting future cash flow, but also future business growth. The two are deeply intertwined, with poor cash flow being the number one reason 82% of small businesses fail. With the knowledge that they will be relying on factor financing — not the whims of clients and customers — to manage their incoming finances, business owners can make strategic decisions that are going to accelerate the growth of their business.

From this secure position, they are able to create a robust business plan that outlines a strategic plan to scale. They can decide in advance exactly when and where they will invest in tools, employees and education that are going to skyrocket their growth, rather than having to wait on cash tied up in their accounts receivable.

With Key Factors, funds can be released in as quick as 4 hours, factor financing can also allow you to quickly get on top of financial burdens, like ATO obligations. This can allow you to focus on moving your business forward, rather than focusing on past debts that need to be settled.

Is factor financing right for my business?

Cashflow Finance PerthIf customer payment terms or rapid growth is affecting your business cash flow, you may want to consider setting up factor financing to get instant cash flow from your sales invoices. At Key Factors, we service small to medium businesses from a range of industries. Whether you are a growing company requiring cash flow to service demands, a newly established company requiring working capital to expand, or you simply need to bridge the gap of slow payments, Key Factors can help.
Companies benefiting from Key Factors factor financing generally have a high level of customers on accounts for the provision of goods or services, and have an annual sales turnover ranging from $500,000 to $30 Million. Invoices relating to business-to-business transactions can be considered, not consumer receivables. We also only process invoices which are still within normal trading terms, and those that are for work fully completed, not progress claims.

Interested in learning more about how to forecast future cash flows with factor financing? Apply online, call us 1300 884 100 to find out more, or fill out an enquiry form and we will be in touch within 1 hour.