5 tips for increasing your cashflow quickly
March 25, 2019
March 25, 2019
For trade businesses, having a steady stream of work and the cashflow to support it don’t always go hand in hand.
From balancing the cost of materials upfront to issuing consistent payment to employees, there is a lot to consider when running a trade business, so when cash isn’t readily available, operations suffer.
The good news? There are a number of small but significant changes you can make in order to quickly improve your cashflow. Here are 5 of the most effective methods:
Negotiate with your Suppliers
With most suppliers, immediate or 7-day payment terms are considered the norm. For trade businesses, however, this is where one of the main issues lies. Your suppliers are generating a healthy cashflow with a fast and effective stream of income, where you as the trade business are having to pay out for supplies without necessarily being paid by your customer in advance.
Whoever your regular suppliers are, sit them down, explain your desire to be a loyal customer and then negotiate better payment terms amounting to at least 30 days. Creating this ‘breathing room’, will provide you with the opportunity to manage your cashflow on all levels, providing you with the opportunity to schedule payments, such as your direct debit for van insurance, at a time when you know you will have a sufficient and healthy bank balance to pay it.
Challenge your overheads
How long have you been paying the same amount for your phone bill, insurance or office rent? Have you ever challenged these fees or just accepted the incremental costs year in, year out?
Make a clear list of your overheads and then highlight the ones that you think you could change or improve. You’ll be surprised by what difference you can make with this one simple action alone.
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You may think the term ‘efficiency’ has very little to do with cashflow, but trust me on this one, it does. The more efficient you are in your day-to-day role, the faster the job will be finished and the quicker the associated invoice raised.
You can also apply increased efficiency to the day-to-day running of your business by utilising a host of tech tools to automate administration tasks, such as email responses, diarising appointments and generating quick quotes. This will save time, cost and resource, enabling you to maximise business hours and increase cashflow as a result. For more details on how you can improve operations through technology, read here.
Increase profitable services
Some of your services will have a higher margin compared to others. Therefore, make sure you take the time to review the profitability of your service offering and, as a result, dedicate more time to bidding for these jobs compared to the low-income opportunities. For example, you may make a high-margin on emergency call-out jobs, where you can take advantage of the ‘Checkatrade Now’ product to increase your workload in this area.
Not only will you successfully grow your profit and turnover, but your cashflow will naturally increase too.
Focus on your Conversion Rate
With platforms like Checkatrade, you may have an influx of potential sales leads, but how successful is your conversion rate? Take the time to review how you approach each sales opportunity. Do you have system in place? Are you efficient and professional with the quoting stage? Do you action follow-up calls to effectively close any outstanding leads?
Focusing on improving your conversion rate and particularly for higher-margin services – is one sure fire way of increasing your sales and resulting cashflow. For more advice on how to win more job opportunities, check out other articles from my dedicated Business Essentials Series here.
It’s important to remember that your cashflow is extremely reliant on the number of jobs you have in your sales pipeline. By optimising your Checkatrade profile and working closely with the Membership Advice team, you will be able to secure and convert a steady stream of job opportunities, supporting cashflow and business growth as a result.
To speak to one of Checkatrade’s Member Advisors today, please call: 0345 2411 393
This article is part of our “Business Essentials Series” – Business Essentials is an informative series of business advice articles created in partnership between Checkatrade and Checkatrade Board Member, Kevin Robinson.
Here, Checkatrade members can gain insight into how they can grow and improve the running of their trade business, benefiting from marketing tips to operational advice. To find out more about Kevin and his business success within the trade sectors, please read his bio below.
A natural entrepreneur, Kevin Robinson is the Founder and Managing Director of Home Fixed, a family-run limited company that specialises in home repairs & installations across multiple trades including electrical, plumbing, roofing, handyman services, bathroom installation & home improvements.
In addition to this role, Kevin also directs and runs Robinson’s Roofing Limited, a specialist firm with over 25 years of flat roofing experience.
Having successfully grown and developed both businesses by over 15% in the last 12 months alone, Kevin boasts an excellent understanding of how to run and scale a successful trade business, with expert knowledge in establishing and implementing effective operational systems, and through maximising platforms like Checkatrade.
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