There is little denying that one of the most important things for any business is cash flow. Most businesses experience some form of cash flow problem at one point or another. However, if you do not handle this issue in the correct manner, it could spiral out of control, which could spell disaster for your company. If you don’t have any money available, you won’t be able to pay your suppliers nor will you be able to complete customer orders. This is the last thing you want to happen. With that in mind, read on to discover how to nip cash flow problems in the bud.
Tips to deal with cash flow problems
- Consider cash flow finance – If you are struggling for immediate funds, one option to consider is cash flow finance. This is a lending service whereby the company in question pays your outstanding invoices, meaning they wait for the client to pay you, instead of you having to shoulder this burden.
- Get your invoices out promptly – One of the most important things to do is get your invoices out as soon as possible. After all, you aren’t going to get paid until you send out your invoices, are you? And, if you send out your invoice late, it is only going to encourage your clients to pay you late too.
- Cut back on expenses – You may think that there are no cutbacks to be made, but you would be surprised by how many savings you are probably missing out on. Evaluate all areas of your company to see if there are any ways to cut back on your business expenses, from outsourcing to negotiating better credit deals.
- Catch credit problems early – Catching credit issues early is of paramount importance if you are to stop them from manifesting. Don’t wait until your client is six months behind to try and collect. As soon as your client has missed the deadline, send out a late notice. If a company usually pays you on time yet they are delayed, give them a call to find out if there is a problem.
- Check credit ratings prior to making a sale – This is one of the best ways to ensure you don’t fall victim to a customer that does not pay. Check their credit rating beforehand to ensure they have a good history of paying people on time.
- Get some or all of the money up-front – Do not spend weeks or months of doing work without being paid. When negotiating a deal, you should make sure you get at least a third of the money up front, especially if you are going to be working on the project for an extended period of time.
- Accept credit cards – Last but not least, you can speed up cash flow by accepting credit cards as a payment from your customers. This means you can get paid within two or three days, rather than having to wait 30 or 60 days. It can really make a massive difference, but do note that you will probably have to pay a monthly fee or a percentage of each sale to the credit card company, so do your research beforehand.
These are just a few ideas to deal with cash flow problems promptly in your business. If you have more tips, please share them in the comments.
