When it comes to running and maintaining a successful business, simply put, cash is king. Within the world of business it’s what keeps the business ticking over. While having huge profit margins, lots of turnover, or even bad debts, can look from the outside be seemingly having an impact, unless the cashflow is there to keep the business running, things won’t last very long. So, if you’re always on the edge and cash isn’t flowing in regularly enough, it might be time to look at what you can to improve it.
Trim your expenses
It may seem exceedingly obvious, but if there’s room to improve your business processes and the way you operate, it will no doubt improve the way cash flows in and out of your business. You may have outgoings that are no loner necessary, for example services or premises that are too big for what you need, or too much incoming stock which you’re struggling to sell.
It’s important to regularly check all of your outgoings. That should cover, overheads, hiring, staff, rent, stock, transport, services, marketing. Simply put anything and everything that you spend money on.
Make sure your outgoings invoices are paid on time
Arguably, the most common sign of cash flow issues, is an inability to pay your bills on time, however, this may not always be your fault. If you’re waiting on payments from one of your own clients, it makes paying your own bills that much harder. It’s important to always try and maintain a strong relationship with your own clients, as you may need to give them a slight nudge towards paying you quicker.
If waiting on your clients is a regular occurrence, or if there are multiple clients that you’re waiting on, it may not be such a bad idea to look at invoice finance to help give you a breather. Effectively an invoice finance company will give you an advance on your outstanding invoices. They will then go out and collect the invoices, giving you more time to focus on running the business, before taking back what they’re owed along with their commission and then giving you the change.
Look towards repayment plans
If you’re facing lots of pressure from creditors, and having a back of log credit is effecting the way you trade on a daily basis, then it might be worth looking toward a formal repayment plan. Having to continually repay creditors can massively affect how much money you have in your bank account on a weekly, daily and even monthly basis.
If you are facing a backlog of creditor debt like this and you’re struggling to repay creditors on regular basis, it might be worth looking towards a formal repayment plan. A repayment plan can pool all your debts together and enable you to pay back your creditors on a monthly basis pro rate. A formal repayment plan is set up by an insolvency practitioner and it protects you from further creditor pressure.
If you’re struggling to get a good flow of cashing running in and out of the business and it’s having an adverse effect on the performance of your business, the important thing is to not panic. There are ways of increasing your levels of cash flow and helping your business to perform better. Look at what you can improve internally first before looking towards repayment plans or forms of financing.