The e-commerce sector can be a capricious fellow when it comes to cash flow management. Unless you are backed up with alternative financial gains or savings, you will have negative cash flow every time the crisis hits. In the long run, poor cash flow is one of the milestones on the road to financial destabilization.
However, if you prioritize improving your working capital and developing additional revenue streams, you can save your online business from financial uncertainty.
We have put together 7 e-commerce tips to keep your numbers in shape and optimize your cash flow.
Cash flow tactics
Keeping an e-commerce business in financial balance is not just a problem for start-ups. Even businesses with growing sales can have cash flow problems. Employee salaries, equipment, water for events - every expense counts! The financial stability of your business changes, even if it's sometimes difficult to deal with! But most of these changes are predictable, so having a plan to improve cash flow for your business is critical.
Here are the best ways to make your business financially sound and prevent a runaway budget deficit:
Get your Idle Funds Working
Your unused cash is money that makes no profit and is constantly losing value as inflation rises. You can try to put it to better use by reducing your debt or paying it off faster than the credit plan calls for. Investing the money in new sectors or new industries can also be a viable option - provided you have done thorough market research beforehand. Another cash flow tactic is to simply invest in stock or new equipment that will improve the quality of your products.
Do not be afraid to Outsource
Your commercial demands should be analysed for sections where outsourcing may be a profitable and money-savings practice. Remember that it is not necessary to employ full-time staff for every business function. Many companies provide good, trained professionals for certain business tasks, and this can actually save you funds and boost your efficiency. You will not waste time and resources on onboarding and training newcomers. A good choice for outsourcing would be areas such as payroll, HR or marketing services.
Improve customer retention
The data shows that engaged customers are likely to buy more services and products and - most importantly - motivate new customers through the old-fashioned method of referrals! It's both easier and cheaper to retain your customer base than to create a new one from scratch. Secure customer loyalty through special loyalty offers, triggered email campaigns, and personalized communications. And remember, these discounts should not be exceptionally costly. If a customer spends a certain amount of money, you can offer a free or discounted product.
Lease instead of buying – when possible
If you need new assets such as equipment, vehicles, or even new real estate, look into the possibility of leasing them before you decide to buy and spend a significant amount of money. This way, you can avoid risky expenses that cut into cash flow and acquire new equipment without spending a lot of cash on the fly. All you need to do is make small payments each month to improve your cash flow when the time comes. This works especially well when you are sure of the equipment you want to buy. You can think it through and plan ahead at your leisure instead of making a hasty, costly decision. Enjoy the benefits of the right cash flow tactics.
Ensure that your customers pay promptly
If you have made a large investment, such as a marketing campaign, and waited a few months to receive payment from your client, you could be in trouble. You could quickly jeopardize your cash flow, even if your business is theoretically extremely lucrative. If your customers wait too long to pay up, your cash flow will certainly decrease. To speed up payment, talk to your customer as soon as possible about payment timing by asking them to pay in instalments in advance or converting regular customers who pay monthly to annual buyers.
Look closely at your expenditures
As obvious as it seems, one of the most effective cash flow tactics that you can follow is to limit the needless costs. Spend the effort to examine all your most crucial monthly expenses and identify strategies to minimize those that you can do without. Make sure you thoroughly review your utility and marketing payments. These are the sectors most likely to be targeted for savings. You should also take time to perform a monthly cash flow analysis. If done regularly, it can help you identify negative trends in monthly expenses and find those that are not essential to your e-commerce brand.
Make marketing your friend
We live in a dynamic era of social media, where the platform that attracts the most users can change drastically in a matter of months or years. Cancel initiatives and campaigns on portals that no longer have customers. Stay tuned for the best channels and strategies to reach clients through new media and campaigns. Stay creative and in touch with modern social media and marketing practices.
Working more effectively
It's neither quick nor easy to improve cash flow for an e-commerce business. Even though you are in the virtual marketplace, managing the budget is just as real for you as it is for traditional businesses. But you can do it right by keeping cash flow tactics in mind and following the crucial e-commerce metrics to keep your business thriving in times of crisis.