Almost every business (especially small- and medium-sized ones) has cashflow problems once in a while. But if your cashflow problems in your business are fast becoming a big issue and are more frequent than before, then it may be time to take some steps to address the situation.
In running your business, you need to have a continuous supply of cash, whether it’s for your daily expenses, for the salaries of your employees, or for specific investment opportunities. But if you find yourself in need of cash and are struggling to make ends meet, below are some easy and simple ways to improve your cashflow situation.
Forecasting is essential
For any business enterprise, big or small, forecasting is crucial. You need to have a better idea of your coming expenditures in order to plan ahead. For this, you can begin with taking note of the cash you have at the moment, then listing down all your expected receivables from your invoices. Afterwards, make a list of all your expected expenses. Make a conscious effort not to overestimate your expected income as well as underestimate your projected expenditures, because even though forecasting can be seen as ‘intelligent guessing’, it is still a good way for you to assess where you are as a company when it comes to cash flow. For better insight and tracking of your company’s financial health, you could also make use of cash flow software to help you out in this matter.
Be strict with late payments
You may not be looking forward to taking stringent measures for late payments, but it has to be done if you would like to improve your cashflow. Before you begin your relationship with your customer, set clear terms when it comes to payment, and make doubly sure that your customer is clear with these terms. But apart from setting clear terms with regards to payment, you should also check your prospective customers’ financial background and ask for references, if any.
Give rewards to good clients
Whilst being strict with late payments, you can also do your part in rewarding those customers who pay early or on time. You can do this by giving them a small discount, by giving them gift certificates or coupons, and the like. Although this can add up as an extra expense, it is worth it if your cashflow is not affected in the end.
Broaden your accepted payment methods
Don’t give your customers the chance to use your difficult payment methods as an excuse for late payments – broaden your accepted payment methods by starting to accept cheques, bank transfers, credit cards and debit cards, and others. Whilst you may be charged a processing fee for credit card transactions, for instance, you will get paid on time and do not have to waste time chasing payments any longer.
Be realistic and take extra measures
As mentioned, it’s normal for businesses to have cashflow issues once in a while. But if you feel that your cashflow issues are becoming too difficult to deal with and you need help, you can always take extra measures and turn to a cashflow financing provider such as Ultimate Finance, who will make sure you have available cash on-hand for your operational expenses and any asset investments you might like to make. You don’t have to worry about not being able to ‘pay them back’, either, because the cash you will receive is based on your own invoices, so as soon as your invoices are paid, the financing company will get their money back as well.
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