Cashflow. It’s the lifeblood of every profitable business, essential for survival and growth. So how do you ensure you manage your print business’ cashflow? Here’s Soyang’s guide.
1. Develop a cashflow forecast
You’re probably rolling your eyes at this already, especially as you’re more than busy enough managing the day-to-day of your business. But we’re not talking about forecasting as a crystal ball gazing, predict-the-long-term-future sort of exercise.
Forecasting can a powerful way of looking ahead and seeing what’s coming down the track in the next few weeks and months, so your print company’s cashflow doesn’t dry up unexpectedly.
If you can build a picture of expected cash inflows and outflows over a specific period (monthly or quarterly is typical) you’ll be able to see potential cash shortages or surpluses well before they arrive and plan for them accordingly.
2. Monitor and control expenses
You can’t know the exact state of cashflow in your printing business unless you monitor it. Once you’re doing that, look for opportunities to make improvements. These could be:
- Sourcing print materials from alternative suppliers (although you’ll want to ensure the lower prices don’t come at the expense of quality). You can explore our print materials here.
- Buying in bulk to secure discounts (although be wary of carrying too much stock – see below)
- Negotiating with existing print suppliers about prices, time to pay or lines of credit
- Trimming in-business costs
3. Optimise your inventory
Your printing businesses has materials it uses constantly. But not everything zips through the business quite so fast. Lurking at the back of the stockroom are papers, vinyls, inks and, quite possibly, hardware that are rarely used.
Careful inventory management means you order the right quantity of stock at the right time, so you’re not left with anything gathering dust.
Remember, everything you hold as stock is effectively cash sitting on a shelf. The right inventory management software can help ensure your wide format print business keeps its money in the bank, not in a cupboard.
4. Accelerate cash in; decelerate cash out
You could charge interest to late-paying clients. You could adopt a 90-day payment strategy for suppliers. You could offer deductions for fast payments.
All of the above should help to ensure that money flows in faster and flows out slower, and all are perfectly viable routes adopted by businesses of every description.
The question for your print business, however, is one of balance. Each of the above measures comes with a potential cost, either in £’s or in customer goodwill. You will know which levers you could legitimately pull that will have a positive effect on your cashflow and, ideally, a positive effect on customer relations too.
Approach with caution, but it’s certainly worth considering these ways of boosting your print company’s cashflow.
5. Consider invoice factoring
Generally speaking, it works like this:
- You invoice your client
- You also send the invoice to a factoring company (there are plenty of them online)
- The factoring company immediately pays you most of the invoice (usually 80%+)
- When the customer pays, they pay you the rest and charge you a fee for the service
There’s no escaping the fact there’s a cost for this, but if you can gradually factor that into your print job pricing while remaining competitive, you may need never wait for your invoices to be paid ever again.
6. Build a cash reserve
If you can, build a cushion of cash reserves to handle unexpected expenses or dips in cashflow. The simplest way of doing it is to set aside a proportion of your profits each month, which can gradually build into several months’ worth of operating expenses, protecting you from nasty surprises.
7. Improve productivity
Boosting your efficiency and productivity doesn’t automatically boost your print company’s cashflow (you could double your output and still find everyone takes their sweet time paying you).
It is true, however, that the more work you produce (or the less you waste), the more you should find a positive knock-on effect for your cashflow.
For most print businesses, productivity and efficiency improvements often come down to technology. If you can invest in a faster or additional printer, or one which automates more processes, you can get more done.
It’s not only a tech issue though. If you can streamline your operation to offer services that you can deliver more quickly, or which result in less wasted time or materials, you should see the benefits in terms of profit, but also potentially in cashflow.
Soyang helps busy print businesses boost cashflow and profit. To explore how we can help you, talk to us.