No company is perfectly safe from cash flow problems. However, they are more likely to happen to starting and small businesses as these ventures traditionally have fewer backups. These companies also find it more challenging to resolve such issues. For these reasons, you have to be extremely effective when it comes to managing the inflow and outflow of cash. Get some essential advice on how to do this.
You should make cash flow projections for upcoming periods. Small companies benefit greatly from weekly estimates as well as from monthly and annual ones due to the higher level of risk. You should have a column with all payments that come in and their due date and another one with all expenses which you have to pay and their due dates. In the best case scenario, the cash inflow for every period will be greater than the outflow. This will eliminate the need for using unsecured business loans and other types of solutions. You should use past data and take into account any future changes that will or are highly likely to occur in order to make predictions with high accuracy.
You should take steps towards receiving cash which is due to you timely and in full. For this, you should get advance payments whenever possible and offer rewards for payments at the time of purchase to customers. You should establish a policy for speedy collection of late payments through debt collection agency Gold Coast. Additionally, by reducing the times between materials receipt, product manufacturing and sale, you will have more cash at hand at any given time. In this way, you will never be late when it comes to paying suppliers and lenders who have provided secured and unsecured business loans. You should also establish a schedule for covering expenses. It is wise to pay what you right before the deadline rather than in advance. You should definitely try to negotiate longer payment terms with suppliers.
• Identify shortfalls in advance – Use the projections that you have made to identify times when you will not have sufficient cash to pay your bills. This will enable you to act timely and prevent the problem.
• Find appropriate credit facilities – Apply for a loan, credit card or overdraft in advance so that you can use the extra cash when the need arises.
• Get help from suppliers – Often supplier are more likely to extend credit compared to lenders simply because they have something to lose if you fall short of cash.
When you have enough cash flow to keep your business going, everything will be fine.