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.