If cash is king, what happens when the king loses his crown?
This is what happens to so many small businesses especially in those early days of trading when profit margins are tight or even non-existent.
To survive those bumpy, early months, entrepreneurs need clever ways of getting around the inevitable cash-flow crises.
If you can see your new business finances heading towards a brick wall, putting your head in the sand and pretending that it isn’t happening is the worst thing you can do.
Instead, take a look at these 5 ways to get the cash flowing through your enterprise once more.
#1 Start Talks with Your Lender
Most start-ups rely on a business loan.
If things are getting tight, go and have a conversation with the financial institution that is lending you the money. If they do not have a financial product that suits your purposes, or if they are not reasonable about increasing your loan, you could look around for another lender.
You can also investigate other avenues to raise some cash such as crowd funding.
#2 Meet Up with Your Bookkeeper
You should have already recruited a bookkeeper to keep your business records in order and your invoices in a structured filing system.
There are many excellent bookkeeping packages and apps available so they will be able to share the financial data with you quickly and easily.
There are no excuses. Meet up with your bookkeeper and run over your accounts. Ask them to provide you with a cash flow projection every month as this will prevent you from getting any nasty surprises.
It also allows you to micromanage your cash position and make subtle alterations each month.
#3 Explore Alternatives for Managing Your Invoices
If a large number of outstanding invoices are the cause of your problem, you could look into top debt factoring companies and get that money paid to you right away.
This will give you an immediate cash boost so that you can invest more in business growth.
You could even ask your loyal and regular customers to pay in 10 days if they usually take 30 days and offer an incentive such as a discount.
To encourage rapid payment, you could offer 5% off for payment within five days.
#4 Get people to pay upfront for your goods or services
One sure way to get prompt payment is to ask for it in advance.
This is easily done by credit card so the client does not actually pay for it for several weeks. Some clients may resist this and you could offer them to pay a fixed amount per month instead.
If you currently do not accept credit card payments, this is the time to introduce it.
#5 Cut Down on Your Outgoings
A cash flow crisis is not just about a lack of cash coming in. It is also about cash going out! Introduce some cost cutting measures but make sure that they are not obvious to your clients.
You don’t want to look like a penny pincher.
So what are you doing to improve the cash flow of your business? I know for me keeping things moving is vitally important the health of my business. If customers don’t pay on time it delays other areas of my business and throws a wrench in the whole thing.
So how about you, share you thoughts and comments below.