It’s the bane of many small businesses – cash flow. It often happens that inexperienced companies can get themselves into a little trouble when it comes to cash flow. Yes, their finances look healthy over a period of a year. But there are weeks and months in that year when cash can get very short indeed.
Perhaps you’ve just had to make a significant investment in plant and equipment. Or maybe you’ve had to pay for a big job upgrading your IT equipment. It can all take it’s toll on your cash flow, even if our profitability is on the up.
The problem is that cash flow problems can endanger a business, even if it is viable in the long term. Staff demand wages. Suppliers require payment and so on. Just a few late payments can wreak havoc on your ability to maintain your operations.
So with that said, here are some helpful tips to help you out of your cash flow problems. They’re temporary measures designed to see you out of the worst of times.
Accept Credit Cards
Often businesses experience cash flow problems just waiting for invoices to come through. Anybody who has spent any time in business knows that invoiced payments are very often late. It’s almost a rule that most companies factor into their cash flow calculations.
One way to speed the process up is to take credit or debit card payments. Usually, this is cheap to do and only takes a day or so to set up.
There are also services, like Wave, that allow you to attach a card payment option to invoices. This means that when a customer receives an invoice, they have the option, there and then, to pay.
Use Invoice Financing
Few businesses realise that invoice factoring improves cash flow. And it works in a very simple way. Essentially, a third party finance company agrees to buy your accounts receivables for a discount. In return, they’ll give you cash today.
In other words, you can pay a company to pay you the money that customers owe you today.
Get Clients That Pay A Retainer
One of the perennial problems of being self-employed are the ups and downs in your income. One month you could land a massive $10,000 contract, and the next month, nothing.
Often while you’re busy working on one project, you don’t have the time to invest in marketing your services to new clients. And that can be a problem. You have to endure months of famine before new income arrives, and that can be stressful.
One solution to this is to try to get customers to pay a retainer. This is a small sum of money that they pay you each month and in return, they can call on your services when they need them. It’s a win for both parties.
Raise Your Prices
Your customers won’t be happy that you’ve raised your prices, but be honest with them. Tell them that you’ve had to raise your prices to keep the books balanced. It’s way of defusing the situation while generating a bit of sympathy to boot.
