Are you having a hard time making sure that you have enough money in your SaaS business account to pay the bills? Cash flow is a consistent problem for many businesses that follow this model, but that doesn’t have to be the case. Cash flow can easily be improved by following a few specific guidelines.
If you’re ready to solve your cash flow problems, these five tips will help you to get started the right way:
1. Set Up Regular Invoices
The way that your company invoices clients for work performed can either help or hinder the cash flow in your business. Think about how you primarily gain clients. For many SaaS companies, their services are subscription-based and must be billed on a monthly or quarterly basis. One way to immediately improve cash flow in your business is to set up invoicing that includes a payment link for client convenience.
Other SaaS companies might be more geared to work on long-term projects. While the default might be to bill for the entire project upon completion, this can be a disaster for your cash flow. Instead, you might want to work with a SaaS accountant in Winnipeg to invoice based on milestones or percentage of the job completed.
Both of these methods are designed to bring more money into your business reliably, ultimately improving your cash flow.
2. Annual or Recurring Payments
Another key tip to help improve the cash flow for your SaaS business is to implement annual and recurring payments. You might be able to convince your customers to sign up for an annual plan by offering some type of incentive. Most often, this means giving them a discount in exchange for paying for the full year upfront.
While it may cut down on the money you earn, you do get the full year of payment upfront, which is great for cash flow.
Recurring payments are another way to ensure that you’ll get the money that your customers owe you. You can set up an automatic withdrawal from their bank account by using accounting software. Clients will love the convenience of not having to manually pay their bills each month, which may lead them to stick with your SaaS business for a longer period.
3. Cut Your Costs
It might sound like common sense, but one of the best ways to manage your cash flow is by reducing your costs. Take a hard look at the budget and see where you might be splurging on unnecessary items. For example, you might be able to rent a less expensive office space, cut out the premium coffee you stock in the break room, and slash spending on office furniture and supplies.
By cutting some of your expenses, you’ll free up more cash flow that can be directed back into the business and/or pad the savings account. You might find that reallocating this money allows you to purchase new technology that will ultimately grow your business.
4. Keep Your Customers Happy
Most SaaS businesses already know that it costs less to retain a customer than it does to recruit a new one. While this doesn’t mean that you should never focus on new customer attainment, it does mean that you should shift some of your focus to retaining current accounts.
When your business loses a client, you’ll be missing out on the monthly revenue as well as the cost it took to obtain them.
One way to keep your finger on the pulse of how satisfied your customers are is simply to ask the right questions. You can send out follow-up emails after they sign up for your software to ask how they’re enjoying the program and see if they have any questions about how to use it.
A follow-up phone call inquiring whether they have any concerns with the program is equally effective. It creates a personal touch and gives clients the opportunity to bring up any questions that they have encountered since signing up for your services. This helps with customer retention and ensures that you don’t have money walking out the door.
5. Consider Upsells
When you head to your local fast-food burger joint, you are likely asked whether you would like to upgrade your combo meal to a larger one. You are constantly being upsold on items that you didn’t think you needed. But what if you could actually solve a problem that your client has been having with your SaaS business?
Be sure that you’re collecting data from existing customers about their pain points and what they wish your software could do for them. Then, you can take this information and design features that align with their desires for an additional fee. You might need to design a new aspect of your software, build in integrations with other SaaS products, or do something else entirely.
Since you should already have their email addresses, you can send out newsletters advertising special offers and upgrades as they become available. This makes the upsell feel exclusive to existing clients.
Hiring an Accountant
The truth is that you may not be able to handle your cash flow problems on your own. Hiring a Winnipeg accountant to help you review your budget and expenses can help you sort through your cash flow issues. Compass Accounting can help your SaaS business thrive!