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To help improve your financial position, you must assess your business operations and identify areas that need attention. Many factors determine the overall financial health of your business, and there are several things you can do right away to increase your chance of success.
Below, we discuss several actions you can take to improve your financial position.
1. Collect Outstanding Debt
While this is easier said than done, collecting on your outstanding debt will improve your company’s financial position immediately. After all, making money is why you do what you do, right? Nobody works for free, but unfortunately, many customers forget this and leave their invoices unpaid for extended periods. You can’t live like that.
If you don’t have time to chase people for payment, hire a debt collector to do it for you. Alternatively, you can opt to go the invoice finance route where a third-party lends you money based on the value of your unpaid invoices. This gives you the cash you need now while you continue to collect on those outstanding bills.
2. Seek Professional Financial Help
If you don’t already have one, get yourself an accountant to handle the financial side of your business. Even if you think your budget is too tight for the expense, it’s important to find the funds for it as no business should be without this expert. Not only can an accountant find ways for you to cut costs and improve your cash flow, but they’ll also know all the deductions and benefits you qualify for at tax time. This alone is a good reason to have an accountant.
3. Look for Ways to Cut Expenses
This sounds like a no-brainer, but it needs to be on this list as it’s one of the easiest ways to improve your company’s financial health. Every business has expenses, but many of them are higher than they need to be.
For example, if you have any loans for your business, what kind of interest rates are you paying? Refinancing or switching lenders can reduce those interest rates and save you money. This also applies to suppliers and insurance companies. Shopping around for better deals could result in huge savings. If you need to make large purchases, find out if you can make periodic or deferred payments to keep more cash on hand.
4. Sell Unwanted or Unused Assets
Do you have extra equipment or products just sitting around that you could sell to make some extra cash? By selling the unwanted or unused items you have sitting around, you make some extra cash and free up any money you may be paying for storage.
5. Lower or Raise Your Prices
In most cases, lowering your prices is a good way to move inventory, increase sales, and bring in new business. Of course, you need to make sure you aren’t lowering the prices so much that you lose money. Most of the time, just a slight discount is enough to appeal to customers.
That said, sometimes raising your prices is the better choice. If you haven’t adjusted your prices in a long time and they are below market value, raising the price is a smart move. If you can up the price of your products just a bit without losing too many customers, it’s a good way to improve your financial position.
Many businesses have cash flow problems and are in need of strategies to improve their financial health. All your activities, decisions and plans affect your financial health. If you would like to improve your company’s financial position, try the suggestions listed above.