—
Many businesses these days experience cash-flow problems that can leave them in a very difficult situation. For smaller and startup business, this type of issue can bring everything grinding to a halt, which is why businesses need to have some sort of backup plan in place. When your cash supply runs dry, even on a temporary basis, you may find yourself unable to meet essential costs. This could include everything from purchasing supplies and stock through to paying employees and bills.
One backup solution used by many businesses is a business line of credit giving the means of withdrawing cash up to a specified amount when they need to. For those times when cash-flow becomes a big issue, this is something that can provide peace of mind and invaluable assistance, enabling you to continue operations.
Solutions to Cash-Flow Issues
As a small business, you need to ensure that you are prepared for the possibility of cash flow issues. There are a number of steps that you can take in addition to having a business line of credit in place for emergencies. Some of the steps that can help to see you through financial difficulties as a business include:
- Favorable terms with suppliers: Try and work out favorable terms with suppliers so that you have more time and flexibility when it comes to making payment for your purchases. Make sure that you are on good terms with them and that you maintain a good history in terms of payments when you do have cash readily available.
- Give your clients incentives to pay more quickly: Cash-flow issues are often caused by your clients and customers not making payments on time. One way around this is to give them more incentive to pay on time – for instance, this could be by way of a discount on the total amount they have to pay or some other reward that will make them want to pay early or on time.
- Suspend services that are not essential: Many businesses use a range of services that are considered non-essential. These can be quite costly so if you are experiencing cash-flow issues, it is worth looking at suspending these until things are back on track. This could include services such as landscaping, which can then be resumed once your business finances have improved.
- Cut expenses: Another important thing to do when you are experiencing cash-flow issues is to look at all of your business outgoings and to make cutbacks wherever possible. Of course, you should ensure that the cutbacks you make will not adversely affect the operation of your business.
Unfortunately, cash-flow problems are commonplace amongst new and small businesses. This is why looking at ways to reduce the risk of cash-flow issues as well as looking for solutions is something you should do in the planning stages of your business. This will help to ensure you are more prepared.
—
Get the best stories from The Good Men Project delivered straight to your inbox, here.
—
Photo credit: Getty Images