S T A R T U P C A
By CA Manish Kaushik. 24 August 2020
Tackle Your Cash Flow Problems Using The Tips

Managing cash flow is critical for the success of any business. Get it right, and shareholders, creditors, and employees are happy. Get it wrong, and the company could end up on the strings.  
Cash flow problems can strike even in profitable companies, particularly those who are experiencing speedy growth. cash flow problems, CFO, cost-cutting, cash flow, cash flow management, cash flow statement, cash flow problems and solutions accounting, cash flow problems case study, effects of cash flow problems.


So, how do you protect your business from future cash flow issues?
1. Cost-cutting
The cost-cutting will have a major impact on your bottom line than revenue-raising purposes. You could also reduce the number of employees through the reduction of excess. You can also talk-to creditors to ask for better payment terms.

2. Carry out credit checks
Before choosing a new client, go through your credit checks. Companies that continuously make late payments or default on payments should be red-flagged. You should get new customers to sign contracts that include your payment terms.

3. Offer early payment discounts
Inspire your clients to pay earlier than normal by offering early payment reductions. The first payment discount should be used only when the company is in a critical situation and need for cash. Do it too often, and you will make a serious impression on your profit margins.

4. Reduce your payment terms
Cut your payment duration from 60 days down to 30. Think of it, this way when you enable your clients to pay in arrears for your products or services, you’re actually giving them short-term unsecured loans.

5. Lease rather than buy
Consider leasing rather than buying cars, property, office furniture, machinery, and IT and telecommunications devices. The benefit of renting rather than buying is that you have to do small monthly payments. This can help your cash flow, also you can claim the lease expense.

6. Raise your prices
Companies are often unwilling to raise their prices for fear they may lose their valued customers to competitors. But even a small growth in costs can cut away from your profit margins. You can overcome consumer’s protection to a price rise by offering bundled products or services.

7. Issue invoices promptly
Many firms don’t issue receipts quickly enough or chase late payments. Think of it this way: every sale has already cost the company in some way, whether that’s the purchase of raw materials, warehousing, labor, sales and marketing, and distribution. If you don’t receive what you owed, you’ll be more inferior than if you nevermore made the sale.

                                                                     American entrepreneur Nolan Bushnell says
                                                    “A sale is a gift to the customer until the money is in the bank’’

8. Use invoice financing
Choose a company that presents invoice financing (either receipt discounting or factoring) to receive an instant cash injection. Such companies provide funding on behalf of your unpaid invoices for a fee. Usually, you will receive up to 85% of the number of unpaid invoices within 24 hours. You’ll then receive the remaining 15% minus the merchant’s charges once your customer has paid the outstanding invoice.

9. Get external funding

You can approach your banks or lending institutions for short-term credit or use other funding sources such as self-finance, partners, investors, and alternative finance like peer– to–peer lending.

10. Hire a part-time Chief Financial Officer
A part-time CFO from the CFO Centre will look for all the things that pose a threat to the company and work with you to resolve them. Your CFO will look for ways you can meet your most pressing financial requirements and review all incomings and outgoings to find where improvements and savings can be made.
cash flow problems, CFO, cost-cutting, cash flow, cash flow management, cash flow statement, cash flow problems and solutions accounting, cash flow problems case study, effects of cash flow problems.