Six smart ways women founders boost cash flow
Without a savvy approach to handling cash flow, your business could struggle. When you don’t have enough money as a female business leader, you may not be able to pay vendors or employees. And you won’t be making a profit.
Fortunately, you can take control of your cash flow situation with a few wise decisions. Keep reading as we explore six practical ways women founders can boost cash flow.
1) Always get deposits
You can confirm interest and secure immediate cash by requiring deposits for all work. Asking for roughly 50% as a deposit before beginning a project ensures your cash flow is solid.
Just be sure to outline deposit details in your contract. Give clear deadlines for submitting deposits and specify the exact amount.
2) Switch to shorter payment terms
Don’t give people too long to submit payments for your services. Instead of allowing a month or two before issuing late fees, request payments within one or two weeks. Whether you’re in the tech industry or trades, prompt payments are a key part of your cash flow.
Be prompt with sending invoices, too, to encourage quick payments. You could even incentivize faster payments with discounts or freebies. And be clear about late penalties in case you need to charge fees.
3) Set aside emergency reserves
Sometimes, despite your best efforts, you’ll have issues with your cash flow. Maybe a loyal client breaks ties with your company. Or perhaps you’re dealing with a late payment.
As a woman founder, you want to be prepared for these moments. In general, it’s smart to have around three months’ worth of expenses in the bank. Aim to set aside a portion of your earnings each month in an emergency account.
Additionally, if you’re not able to take money from your accounts, you’ll want to be knowledgeable about the best small business financing options. Crestmont Capital, for example, offers clear details about small business financing and lines of credit that can help your business when your cash flow isn’t stable.
4) Create predictable income with retainers
With retainers, you can gain more consistency with your income. Essentially, you’ll engage in a longer-term relationship with a client for your products and services.
Maybe you provide a SaaS package that spans two months, for example. In this scenario, you’ll be assured you have steady work with the client for two months.
Rather than constantly seeking new clients, you can use retainers for greater consistency. As a new business, you’ll build a reputation for loyalty and reliability, too.
5) Don’t overload your inventory
Maintain a lean inventory. Too much inventory can take up space and eat into your cash flow. Instead, test interest in new services or products before committing to larger production runs.
Consider other business models, too. With dropshipping, for instance, you’ll outsource some responsibilities. And you can limit waste so your money can be invested in other parts of your business.
6) Use accounts receivable (AR) automation tools
You don’t want to be tethered to paperwork as a woman founder. But if you’re manually checking invoices and inputting payments, you’ll have your hands tied. And you will be more likely to make miscalculations.
Use automation tools to streamline your internal processes. Set reminders so you can follow up with clients needing to make payments. Submit invoices automatically and keep track of all payments. You’ll save time and look more professional as a business.
Create more consistent cash flow
Boosting cash flow might sound overwhelming. But when you maintain a lean inventory, ask for deposits, and trim payment timelines, you can take control of your finances. Automate processes and keep emergency cash in your reserves, as well.
With a careful approach, you can improve your cash flow as a woman founder.
