As you start to grow and develop your business, it’s very likely you will begin to face cash flow issues.
If you aren’t careful, these issues can start impacting your business to the point where they can become fatal. In fact, cash flow is one of the most common reasons small businesses fail.
This problem can be especially difficult to handle if it’s related to the short-term cash flow within the business, which will leave you struggling to pay bills, salaries and ultimately hinder the growth of your business. In order to help you overcome this obstacle, let’s take a look at some of the best ways to help solve your short-term cash flow issues.
One of the most effective ways to make sure your business doesn’t suffer from short-term cash flow problems, is to try planning and running your finances as precisely as possible. This will help you anticipate the needs and possibilities of your company, further allowing you to make sure you have all of the funding you need and eliminating the problem before it arises.
On top of this, you should try to cut any unnecessary expenses by keeping track of where your money is going, or hiring a business analyst to do it for you. This will allow you to free up a lot of extra capital, which will help you better manage the issue.
Take out a loan
While planning ahead is very important when it comes to solving the third problem, it requires a long amount of time for it to effectively start helping you, whereas you will likely need a more imminent solution. Because of this, it can be very useful to look into taking out a loan, which will give you the ability to get things under control.
There are two ways you can approach this. The first one is to look into taking out a traditional business loan. This will provide you with something to fall back on and allow you to take care of your short-term cash flow for the near future. However, this option can be unsuitable as it may require a lot of time or a very strong business credit rating to obtain. This is where the second option comes in. Taking out instant cash loans can help you get the funding you need quickly and with very little trouble, making it one of the most convenient ways to efficiently solve your shortage of cash.
Focus on your income
Another way you can start sorting things out, is by boosting the amount of money that is coming into your business. Make sure your current clients are satisfied and start seeking new ones, as driving your sales up will give you more cash to work with. However, you shouldn’t stop there. You can look for new sources of income by providing additional services along with the ones you are currently offering or raising prices if you determine it will boost your profits.
Despite this, the problem you are facing may not be the lack of revenue coming in, but the amount of time it takes for people to pay you. To overcome this issue, try providing incentives for early payments. You can do this by giving discounts to customers when they are paying you early or offering them better deals on any future transactions. You should also look into incentivising customers to pay you with cash, eliminating the extra time needed for the money to go through the bank while at the same time minimizing transaction fees.
Negotiate your payables
Planning and negotiating payables will help you increase your short-term working capital by making sure you have the best deals possible, optimized so that they fit in with your financial plans. For example, if you have to pay bills on a monthly basis, see if you can get your service provider to make those payments annually or quarterly, freeing up some of the cash for other uses. The other thing you can try is to stretch out your payments by paying them after their due date. However, while this can be an effective solution to the current problem, you should aim to use it with caution as it can have severe consequences in the long run.
Solving your cash flow problems will require you to wisely mix financing solutions, such as loans, and non-financing solutions, like planning ahead, that will guarantee you are working on a long-term fix for the issue. With that being said, the worst thing you can do when it comes to solving your short-term cash flow issue is to wait for it to resolve on its own. As mentioned before, if not taken seriously, this problem can begin to grow and threaten the survival of your business. There is no time to waste, it’s time to figure it out now!