Balancing the books and keeping the cash flowing in a trades business is no easy feat, but it’s the fuel that keeps our businesses moving forward. Whether you’re swinging a hammer or fixing a leaky faucet, these ten strategies are your ticket to optimizing cash flow and ensuring steady growth for your trades business.

1. Stay on Top of Invoicing

It’s not just about paperwork – it’s about keeping the cash rolling in. By tightening up your invoicing process, you’ll get paid faster and reduce headaches down the line.  If your invoicing process is manual, consider investing in technology to help automate the process for you.

2. Track Expenses Like a Hawk

Every dollar counts, and with the right tools, you can keep a close eye on your expenses without breaking a sweat. It’s all about making informed decisions to keep your business financially sound. Make a point of regularly reviewing your credit card statements or your financials, like your Income Statement.  If you’re in construction or other trades, be sure to monitor and track all your COGS (Costs of Goods Sold) and COS (Cost of Service) separately from overhead expenses to ensure you have a healthy gross profit margin too.

3. Negotiate with Suppliers

Building solid relationships with your suppliers isn’t just good for business – it can lead to sweet deals that keep your cash flow healthy and your projects humming along smoothly.  Ask if they offer any discounts for paying early, or if they can extend your terms from Net 10 to Net 30 or even Net 60.

4. Manage Inventory Smartly

From knowing when to stock up, to preventing excess inventory, managing your supplies efficiently is a surefire way to free up cash for where it’s needed most.  You don’t want your products sitting on the shelves, or in the warehouse collecting dust.

5. Offer Early Payment Incentives

Who doesn’t love a good discount? Encouraging clients to pay early can put a little extra pep in your cash flow’s step.  If discounting isn’t your thing, how about incorporating a finance charge or penalty on late payments?  Knowing that they could incur llate fees might be just enough incentive for clients to pay on time.

6. Do Rigorous Credit Checks

It’s all about minimizing the risk of late payments and keeping your financial health in check when dealing with new clients. If you sell expensive, high end products or services, make sure that you’re only extending credit to clients who have good to great credit scores.

7. Review Finances Regularly

Keeping your finger on the financial pulse of your business is key. If you don’t currently have a handle on your books, or have a bookkeeper that you trust, it’s time to re-evaluate.  A good bookkeeper is worth their weight in gold!  With accurate books and a little oversight, potential cash flow hiccups can be smoothed out before they become big headaches.

8. Use Technology for Payments

Making it easy for clients to pay you is a win-win.  Using software that allows your clients to ‘click a button’ to pay you securely and quickly online?  Are you able to accept payments of different types (ACH, debit or credit card)?  Use a payment processor that’s flexible and doesn’t charge an arm and a leg in processing fees..  Streamlining the payment process not only keeps the cash flowing but also makes life a little easier for everyone involved.

9. Optimize Labor Costs

Balancing your labor needs with your business demands is like finding that perfect sweet spot. It’s about getting the job done efficiently without breaking the bank.

10. Plan for Taxes

No one likes surprises, especially when it comes to taxes. By planning ahead, you can keep your cash flow smooth and your business running like a well-oiled machine.  Check with your accountant or CPA for an estimate of what you should set aside for taxes.

Conclusion

By putting these strategies into action, you’re not just navigating the financial waters – you’re steering your trades business towards sustainable growth. Ready to take the next step?

Ready to master your finances? Sign up for a free workshop or schedule a ‘right fit call’ with us at Cloud9 Financial. Let us show you how our expertise can enhance your trades business’s cash flow and secure its future.