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Running a successful SaaS business boils down to one key question: are you making money, or are you losing it? Especially in the early stages, managing cash flow can be challenging. Especially in the early stages, managing cash flow can be challenging. Starting a business involves significant upfront costs—renting space, buying equipment, hiring staff—while revenue often takes time to catch up.
Seven proven methods to boost cash flow
Monetize unused assets
Got features sitting idle in your SaaS platform? Monetizing unused features in your SaaS platform can be a strategic move to find the hidden value and generate additional revenue streams. Start by conducting a comprehensive assessment of your platform to identify features that are underutilized or not meeting the needs of your current customer base. This audit should focus on understanding usage patterns and identifying which features could have potential value outside of your existing user base.
Once you’ve identified these features, conduct thorough market research to determine if there’s demand for them in other industries or among different types of businesses.
Use lean methodology
Implementing lean methodology means making everything in your operations more efficient. You streamline processes, cut down on waste, and focus on using resources wisely to boost cash flow and profitability.
By adopting these lean practices, SaaS businesses can better manage their resources, grow steadily, and stay financially secure. It’s about finding smarter ways to work, reducing inefficiencies, and always looking for ways to improve how things get done. This not only helps save money but also keeps your business agile and ready to tackle whatever comes your way in the market.
Optimize subscription models
To optimize your subscription models, think about adjusting your plans to boost cash flow. For instance, you could introduce different tiers of pricing, like a basic, standard, and premium option, each offering more features as the price goes up. Another approach could be offering discounts if customers choose to pay annually instead of monthly.
When customers see they can get more value or save money by upgrading or committing for a longer period, they’re more likely to choose those options. This not only increases their spending with you but also ensures a steady income stream for your business. This way you are making your subscription options more appealing and keeping your revenue steady and reliable.
Improve Customer Retention
Boosting customer retention is key for SaaS businesses. Think of happy customers as your loyal partners—they stick with you and support your growth. By focusing on customer success, like personalized onboarding and proactive support, you’re nurturing these relationships to get stronger over time.
Research shows that improving customer retention rates by just 5% can boost profits anywhere from 25% to 95%. Having loyal customers not only brings in steady income but also helps smooth out any ups and downs in your cash flow, keeping your business on a stable path to success.
Negotiate vendor contracts
When managing vendor contracts in your SaaS business, it pays to be strategic. For example, negotiating longer payment terms with your software development partner can help you manage cash flow better. Similarly, if you’re sourcing cloud services, exploring different providers or renegotiating contracts can lead to cost savings that directly boost your bottom line. Extending payment periods from net 30 to net 60 days can provide more breathing room during slower revenue months.
This approach not only improves your profit margins but also ensures you have funds available for essential investments like product development or marketing campaigns, ultimately strengthening your business’s financial health.
Automate accounts payable (AP)
Just like optimizing your subscription models helps manage Accounts Receivable (AR), automating AP processes can streamline your bill payments. Utilizing accounts payable software like Forwardly, which offers free bill payments in 60 seconds, allows you to hold onto your cash longer and pay bills precisely on their due dates.
You can even set up recurring payments and schedules, making everything run smoothly without constant manual oversight. And when you improve your AP with custom payment approval workflows, it gets even better. You can set rules for who can approve payments and how much they can approve, making the whole process faster and less likely to get stuck. Automating AP ensures your cash flow stays steady and frees up time and resources for other important business tasks.
Continuous pricing optimization
Continuous pricing optimization is about consistently adjusting your pricing strategy to balance customer satisfaction and business profitability. You want it to be attractive to customers but also make sure it’s profitable for your business. By regularly checking what others are charging and listening to what customers say, you can adjust your prices just like tuning a guitar to keep the crowd happy. Making small changes that match how valuable your product is can help you make more money while keeping customers happy. This keeps your business strong and competitive in the market.
Building financial health with Forwardly
By managing cash flow effectively and optimizing operations, SaaS businesses can thrive and expand without the constant pressure to raise additional capital. This approach not only fosters stability but also lays the groundwork for long-term success in a competitive market.
Forwardly can be an excellent partner in streamlining your cash flow. With our automated business bill payment solutions and free cash flow forecasting tool, you can better manage your finances, reduce manual workload, and make informed decisions to drive growth.
Get in control of your cash flow today with Forwardly. See how Forwardly can simplify managing your finances and boost your business with a product tour here.
