Cash reserves are an important part of business economics and are a critical pillar of your business growth. This doesn’t mean it is easy to build these reserves, especially for small businesses and dental practices.
Let’s look at their importance and how to build them up.
Renegotiate your debt with your creditors to ease your debt pressure, as they will often accept longer settlement periods. This lowers monthly installments, and you can allocate the difference to building cash reserves. If they are not open to re-negotiation, then take your debt elsewhere for a better deal.
On the flip side, put as much spare cash as possible into the debt, wipe it out (and keep it wiped out) and then put all those funds into building reserves.
Tighter Debtor Control
Issuing invoices is not helpful unless you are receiving payment. So put your big boss pants on and politely but firmly chase payments.
Financing Against Debt
The value of unpaid invoices (debtors) is an asset. Arrange invoice financing that pays you a percentage of the invoice within a day, and close out the financing when the invoice is paid.
Reducing expenses is the fastest way to build reserves. Renegotiate supply contracts for better rates or terms and ensure you have a budget - and stick to it! Adhering to a budget might feel uncomfortable, but it will highlight unnecessary purchases.
Repay Reserve Loans
If your cash reserves are used to ‘plug a hole’ then you must be committed to repaying that “loan” to the reserve account. If you are withdrawing and not replenishing, you need to relook at your budget and try harder at cost-cutting efforts.
Hot Tip: Keeping the reserves in a dedicated account that is not easily accessible reduces the temptation to use the funds.
Be More Strategic
One of the ways to cut costs and bring in more revenues is to automate marketing and tasks. We would love to help you come up with a plan and implement it.
Chat with me about building a plan to not just conserve your cash, but grow it with a new marketing strategy.