Easily improve a company's cash flow

1. Optimize your supplier debts

Visit trade payables are an essential lever for improving a company's cash flow. Two strategies are particularly effective:

Extending payment terms

To optimize your company's cash flow There must be no discrepancy between cash receipts and disbursements, in other words, between trade payables and trade receivables. Supplier payment terms must therefore be long enough to give the company time to collect its trade receivables. Otherwise, the company will have to find financing to meet its financial obligations.

Hero our payment solution, enables you to extend your payment terms. The solution offers deferred payment functionality. Based on the BNPL (Buy now pay later) model, the platform allows you to place your orders and pay after 30 or 60 days.

This feature allows companies to optimize cash flow by reducing WCR.

Stagger your payments

This involves negotiating more flexible payment terms with your suppliers, in order to reduce working capital requirements and improve cash flow. You can :

• Ask your suppliers to grant you payment facilities, such as payment in instalments

• Respect payment terms agreed with your suppliers to maintain a relationship of trust and avoid penalties or interest on late payments

• Take advantage of reductions or discounts offered by your suppliers for early payment if your cash flow allows it and if the gain is greater than the cost of credit

• Compare offers from different suppliers and choose those offering the best payment terms without neglecting quality and service

Hero also features a fractioned payment . So you can pay for your purchases in 3 or 4 instalments while your suppliers are paid immediately by the platform.

Reducing expenses

This consists of limiting the cash outflows linked to the purchase of goods or services from your suppliers, in order to increase your margin and profitability. To do this, you can :

• Analyze your expenses and identify those that are unnecessary or excessive These include unused subscriptions, bank charges, energy consumption, etc.

• Negotiate lower prices or volume discounts with your suppliers by highlighting your loyalty, your purchase volume or your ability to pay quickly.

• Consolidate your purchases with a single supplier or pool your purchases with other companies, to benefit from economies of scale and reduce logistics costs.

• Choose reusable rather than disposable products or services, such as microfiber, washable cling film, tissue, etc.

2. Optimize your accounts receivable

Manage trade receivables proactively can significantly improve your company's cash flow. Here are two effective approaches:

Requesting larger advance payments

This involves ask your customers to pay part of the price of the service or product before it is delivered or produced . The deposit represents a commitment by the customer to pay the balance on the due date. To request larger advance payments, you can :

• Include a down-payment clause in your general terms and conditions of sale or in your quotations, indicating the percentage of the down payment and the terms of payment

• Negotiate down-payment terms with your customers taking into account the nature and duration of the service or product, as well as the customer's profile and needs

• Offer incentives to your customers, such as discounts, guarantees or additional services, in exchange for a larger down payment

• Quickly send progress invoices to your customers specifying the deadline and payment method, and facilitating payment by credit card or bank transfer.

Request payments faster

This involves reduce the time between delivery or completion of the service or product and payment of the invoice by the customer. Requesting payments more quickly allows you to reduce working capital requirements and improve cash flow. To achieve this, you can :

• Set short or zero payment terms, respecting legal limits and professional practices, and taking into account the type and value of the service or product

• Send invoices as soon as possible using online billing software to send invoices by e-mail and accept payments over the Internet

• Regularly follow up with customers by sending reminders by e-mail or telephone before and after the invoice due date, and indicating any applicable penalties or interest for late payment.

• Offer incentives to customers such as reductions, discounts or gifts, for early or on-time payment

However, you can do away with all these procedures by using Hero. With Hero, even if your customers pay later, the platform immediately pays you the amount of your accounts receivable.

Hero permet de create and send secure payment links by email or SMS, which offer customers the option of paying in cash, deferred payment or in instalments. receive an immediate cash advance on their invoices, without waiting for the payment due date. Hero is a simple, flexible solution for optimizing company cash flow.

3. Use external financing

A company can adopt these different financing options to optimize its cash flow management:

Authorized overdraft

The a credit facility granted by the bank which allows a customer to have a negative balance on his bank account, up to a pre-agreed amount and duration. The authorized overdraft can be used to meet occasional cash-flow requirements, in the event of a shortfall between income and expenditure. In return, the customer must pay interest and fees to the bank .

Overdraft facility

The a form of short-term credit that allows customers to benefit from a negative balance on their bank account, on an exceptional basis and for a short period (15 days per month). It can be used to pay for urgent or unforeseen expenses, while waiting for income to arrive. Here too, the customer must pay interest and charges to the bank in return for the overdraft facility.

Discounting

This is a financial transaction in which a creditor agrees to assign a commercial paper (bill of exchange, promissory bill, etc.) to a bank, in exchange for an immediate cash advance. Il allows the creditor to obtain payment before the debt is due, without waiting for the debtor to pay. To benefit from this system, the creditor must pay interest and fees to the bank.

Venture capital

The a form of investment in which an investor (natural person or legal entity).., to take a minority interest in a company's capital. It enables the company to finance its launch or development, in exchange for a share of control and future profits. The investor hopes to realize a capital gain when the shares are subsequently resold.

4. Optimize your stock

Optimizing your inventory management is essential to keeping your business running smoothly and profitably. Here are two key strategies:

Vendez votre stock inutile

One of the most effective ways to improve your cash flow is to sell unused or obsolete stock. By holding on to products that don't sell quickly, you tie up capital that could be invested in more profitable items. Organize regular inventories to identify slow-moving or end-of-life items.

Implement strategies to sell them quickly, whether through promotions, sales or by offering them to resellers at advantageous prices. This will free up money that can be reinvested in more sought-after products, helping to strengthen your cash flow.

Manage your just-in-time inventory

Just-in-time management involves minimize the amount of inventory held, ensuring that it is replenished at the very moment it is needed for production or sale . This approach makes it possible to reduce capital tied up in inventory You only have what you need in the short term.

Using efficient supply management systems, you avoid overstocking while ensuring that goods are available when you need them This has a direct impact on your cash flow, as it is not invested in unnecessary inventory and can be used for more strategic purposes, such as new product development.

In short, improving a company's cash flow is based on sound financial management strategies. Selling unneeded inventory, adopting just-in-time management and negotiating advantageous terms with suppliers are all effective measures. Find out more how to improve a company's cash flow It is therefore important to maintain constant vigilance over cash flows, and to adjust practices accordingly.

Other articles on the same subject:

• 8 business financing solutions: which one to choose?

• Start-up financing: the 8 best solutions

• Need for cash: what is it and how to react?

• Trade payables: definition, calculation and management

• Customer outstandings: definition, calculation and instructions for use

• Rolling forecast: what is it and how to use it?

• Advertising budget: what is it and how do you plan for it?

• 30-day payment: extend your payment terms