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How to generate more income with one small change


We’ve all heard the motto “Work smarter, not harder”

When you’re running a small business it can be extremely hard to know what to do in order to generate more cash and increased profit.

The good news is that sometimes, small changes can have a huge impact. Such as:

1. Reviewing pricing structure

2. Review cost structure

3. Improve customer payment terms

We’re not suggesting you get greedy with your pricing, but just a 1% price increase on a yearly basis can have a significant impact to your profit and cashflow.

Let’s look at an example…


Using our specialist modelling program, we can show you in real time what small changes can do for your business.

Let’s look at our fake company, Williams Plumbing.

William’s base line is $4.6m profit but a negative cashflow of $3.2m (he has a lot of equipment under finance and has a lot of bank loan repayments).

1. Review Pricing Structure

A 1% price for William’s business improves his bottom line by $420k per annuam and improves his cash into his business by $333k.

3. Improve customer payment terms

Improving the average payment terms of your customers can be as simple as allowing credit card payments online.

Using smart software such as Xero, small businesses can implement ‘online invoices’. This means, that their customers can pay their invoices online using their credit card.

Our clients who have implemented this feature over the last 4 years have on average, improved their debtors days by 14 days. they’ve done nothing else to encourage improvement in customer days!

To show how this affect’s Williams business, we’ve improved debtor payments by 14 days. This means he receives $1.6m more cash every year – just from switching on online invoice payments and encouraging clients to pay this way!

Fun Fact: Xero data shows that small business debtor days without online invoice payments averaging 45 days. With online invoice payments they’re generally within 30 days of payment. That’s huge for cashflow!


Want to try this on your business?

We’re offerring a review of how you can improve your business profitability or cashflow with our modelling tool.   

We just need a copy of your:

+ Profit & Loss for the last year

+ Balance Sheet at year end

To request your review, please call us on 02 6543 1219.


 

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