On the simplest level, business success comes from earning more money than you spend and building an ever-increasing profit margin over time. As anyone struggling through a slow business cycle can attest to, you also need to run your business efficiently. All the sales in the world will not keep you afloat if you can't collect what customers owe you. Work to improve your cash flow, and you can lift your business to new levels of success.
Stay Ahead of Debt
The most successful businesses collect the majority of their receivables before their invoices come due. Depending on your business, this may be easier said than done. Slow-paying customers can be difficult to prod to move faster, and your biggest customers tend to be the ones over whom you have the least leverage.
Still, using the right tools and processes can greatly improve your revenue cycle. When you get ahead of your debts, you can do more to build both your credit profile and your business. It unlocks doors that remain closed when you can't get out ahead.
Getting ahead of your debt does more than just make your finances more comfortable; it gives you a chance to grow. One place to start is with your inventory. The cushion that an efficient cash flow gives you can provide an opportunity to build your inventory levels to complete more sales, more quickly. Instead of catching up with your orders, you set yourself up to be ready to take more.
This shift will yield dividends that build on each other. More inventory in stock gives you more sales and faster collections because people don't need to wait for products to arrive. As you grow, the process rolls over and lets you continue to increase. You can invest in more marketing to increase sales. Your cash flow gets even more efficient, and you can maximize your customer base.
Improve Profit Margin
All of this gives you the opportunity to stretch your profit margin wider. Your improved cash flow gives you greater access to new capital, through sales or credit for your business. Your investment opportunities grow, letting you purchase more efficient equipment and access less expensive credit lines throughout your growth cycles. You will build stores that make it easier to weather slow business cycles, thus avoiding cutting further into your profits.
None of this is easy to achieve; you have to find your footing and start on a trajectory toward more efficient collections and cash flow. Committing to this effort will give yourself potential growth paths that you may only dream of today. Focus on efficient cash flow to lift your business to new heights.