7 Overlooked Cost-Reduction Tips That Improve Your Company's Cash Flow

No matter the size of your business, healthy cash flow is the key to your business’s longevity. Without proper management of cash, your business could land up in hot water. Hence, you need strategic plans to get to the positive cash flow and stay there. 

Cost-reduction strategies for a healthy business cash flow

One of the most effective ways to keep your business cash flow healthy is to keep costs down. These cost-reduction strategies can help pinpoint where you can implement change or curb expenditure to improve your business cash flow.

1. Evaluate your business processes

By evaluating your business processes, you will find it easier to spot where you can save. Some activities may take up a lot of money and resources yet have very little to no impact on your business profitability. 

Consider streamlining your business processes by reducing time-consuming, labor-intensive manual tasks, and switch to automation instead. For example, rather than assigning a few employees to manually check your inventory, you can use inventory management software to handle this task automatically. Thus, you can concentrate your employees on other work that matters for your business. 

However, it is important to understand your business's financial position before investing in software or any other technological tools. Make sure your business is financially secure and the investment will provide it with long-term benefits. 

2. Cut unnecessary purchases

Tracking expenses over your purchases can greatly help in keeping your finances under control. Go through all your purchases to find out if there are unnecessary wastes of money. The easiest way to track purchases is by using a centralized procurement system.

A centralized procurement system enables you to view and manage purchase requests from all departments and locations. The system allows you to set multiple workflow approval levels to ensure all those requests comply with your company’s procurement policies and departmental budgets.

With all the company’s purchases being centrally tracked and audited, you will be able to cut down on rogue spending. 

3. Retain your existing customers

Retaining your existing customers is cheaper than acquiring new ones. Did you know that you can turn your existing customers into your biggest brand advocates? 

Go through your customer order history using CRM software to analyze your customer behavior. Through that analysis, you can find out their buying patterns, the services or products they prefer, and more. In this way, it will be easier for you to create personalized offers for your existing customers. 

Another effective way to convert your existing customers into repeat buyers is by engaging with them on social media. Go the extra mile to answer their questions and address their concerns, especially when it relates to your business or industry. This can help build trust and encourage customer loyalty. 

4. Drive sales with incentives and promotions

While incentives and promotions can increase sales so quickly, you have to be smart with them, otherwise, you will end up with low-profit margins. 

Leverage your customers’ details to create personalized promotions, gift cards, loyalty programs, or any incentives that get your customers to shop more. You can also create remarketing campaigns from your customers’ wish lists and abandoned carts on your e-commerce website. 

Another worth-trying tip is to run a contest on social media and start a referral program to boost brand awareness and bring in new customers. 

5. Improve relationships with suppliers

Maintaining solid relationships with suppliers will put you in a better position to negotiate with them. This means they are more likely to offer discounts and specials. Over time, and as your relationship with your suppliers grows, you can find more benefits as this opens up because of your long-established relationships and the fact that you bring business for them.

For example, since you have built a good relationship with a supplier and they find you trustworthy, there may be opportunities for discounts, or more flexibility in extending your credit. Instead of only having two weeks to pay the supplier, you could push for four weeks. And because the supplier knows you are a good fit for it, they might be willing to accommodate. 

6. Set invoice timelines and terms

It is important to set very clear written payment terms, before accepting new clients or suppliers. Make sure to specify when payments for invoices are expected (e.g. within 15 days) and send those invoices immediately. 

For projects that require a lot of resources, we suggest that you ask for an initial deposit so that you have the cash to cover the necessary expenses. And to get paid faster, you can send your clients payment reminders before invoices are due. An e-invoicing system can greatly help because it notifies you of unpaid invoices and can send automated payment reminders to your clients. 

7. Inspect your assets or inventory

If your business holds a lot of assets or inventory, conducting an inspection can be a great cost-reduction strategy. The purpose of this inspection is to find out the value of your assets or inventory to your business. 

Through this inspection, you will be able to find out whether an asset or an inventory item is profitable. You can get rid of your non-performing assets by selling or auctioning them. And when it comes to slow-moving inventory items, consider clearing them out by discounting, upselling, and cross-selling them. 

You may also want to consider discontinuing purchases of your non-performing assets or inventory items in the future. In this way, you will be able to reduce costs more effectively. 


Not all of these strategies are perfect for every business, so choose the one that makes the most sense for your brand. And don't be afraid to combine several approaches, as this might just be more effective. Implement these tips consistently, and your company may be able to survive and thrive even in times of financial instability.

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