Cash flow is the total amount of money going in and out of your business and is a big problem for most small business owners. If your sales projections weren’t quite what you expected, or you have a customer or client that hasn’t paid you on time, it could mean that you don’t have enough money to cover the day to day expenses of running your business. This, of course, is a big issue and could result in your business going under. If you want to avoid this possibility, then ensure you read the tips below.
Cut Down On Non-Essentials
One of the first things that you should do when you have little money coming into your company is to cut down on expenses that aren’t bringing in profit. If you have a business landline but always have customers and suppliers calling your cell, why not consider having it cut off? It won’t save you massive amounts of money, but it’s money that could be better spent elsewhere. The same goes for any services that you may be subscribed to.
Push Back Bills
It’s unlikely that you’ll be able to put off paying for things like your rent or mortgage, but you may be able to negotiate an extension with your suppliers, especially if you have a good relationship and have always paid on time before. In fact, if you seem to be having a cash flow issue the same time every month, you may want to ask them to push back you due date permanently, and pay a couple of weeks later from now on instead.
Consider Increasing Prices
We live in a world where everything is slowly getting more expensive, and that should include your products and services too, especially if you’re having cash flow issues. However, you don’t want to just raise prices on a whim; You need to be strategic about it. Don’t increase your prices by massive amounts, and try to keep them below the prices of your competitors. If you increase your prices by too much, you’ll risk losing customers to cheaper competitors. Visit business.tutsplus.com for advice on how to raise your prices.
Give Them Incentive
If your cash flow issues are caused by customers making late-payments, you may want to consider offering a discount to customers who make their payments early. However, you may find that this costs you more money that you’d like, so you could also consider doing the opposite, and make your customers aware that they’ll be charged extra for making a late payment.
Get Some Credit
If you’re really strapped for cash, then you may want to consider applying for a business credit card or a working capital loan, to help you cover the day to day expenses of running your business, as well as payroll and marketing. Workingcapital.co compares some of the best working capital loans, to help you find the best one for your business.
Once you manage to get out of your cash flow crisis, you need to make sure to come up with a plan on how to avoid any future financial problems.