12 tips to accelerate your cash flow

According to Marissa Bonants of The Money Mate the biggest challenge food entrepreneurs face is managing cash flow. "In the beginning, you invest an awful lot. The money goes into developing your products, boosting the marketing, the visual identity of your brand and so this list can suddenly add up fast. It takes a lot of capital leading up to the time when you start making a profit. 

After a while the sales increase and a lot of money flows in, at that point it is definitely important to continuously focus on cash flow. To sell these products, you will first have to purchase and prepare it. To be sure of a profitable model, it is necessary to have a clear understanding of what your cost price is made up of. Does it cover all costs and will you keep a margin to pay all other costs (marketing, staff and office)? Last but not least, what is the profit percentage. Even with a profitable cost price, managing your cash flow can remain a challenge."

We'd like to give you some tips to accelerate your cash flow: 

1. Bill earlier: Simple, but effective. Invoice earlier so customers pay you sooner, too. The legal payment period for an invoice is 30 days.

2. Make paying easy: Offer your customers multiple options or put a direct payment link in your invoice. Easy does it!

3. Give discounts: Consider a discount for customers who pay quickly or all at once.

4. Be clear: Clear payment terms for you and your clients are essential. After a verbal agreement, make sure you also put the agreement in black and white, such as in an email!

5. Option of factoring: With factoring, you actually sell your sales invoices to an intermediary. The middle party ensures that you receive your money immediately, but of course asks a (sometimes substantial) commission on this.

6. Explore the "sale & lease back" option: There are several options for equipment and machinery. You sell a machine for €10,000 (money in) and lease the machine back for €1,000 a year (money out). So money in is faster than money out.

7. Reduce your debts: Having a debt costs money, so less debt also means less money out.

8. Inventory management: Don't miss out on sales when products are out of stock or when you have to make last-minute extra purchases (often more expensive).

9. Extra income: Provide an extra source of income when you suffer from seasonal fluctuations.

10. Pay yourself on time: this will not cause you to incur additional costs. If for any reason you are unable to do this, contact us soon to make alternative arrangements.

11. Optimize: look at your business processes (payment process, purchasing process & inventory process) and examine where there are gains to be made in that process. 

12.  Get advice: Experts can help you cash flow if you have a lot of fluctuating income and expenses.

These tips are based on the article Marissa wrote on her own blog. Find the article here and you can read more about cash flow acceleration strategies (great word for Scrabble!). We look forward to seeing you at the workshops!