PropertyFindsAsia|People aren’t kidding when they say that cash is king. Even if your small business is doing great on paper, it could take days — even weeks — for all that profit to actually land on your business’s bank account. Consequently, a successful small business can crumble simply due to not having enough cash on hand; ironic isn’t it? To avoid sharing the same fate, take a look at these five quick ways to solve all of your short-term cash flow problems and stay in the clear.
1. Practice Better Invoicing
The most common culprit when it comes to low cash flow issues is usually attached to bad invoicing habits. Namely, your invoices should always be sent the moment you conclude your business; otherwise, you’ll end up playing hide and seek with your clients indefinitely. Try using an automated billing system to reduce human errors and to send invoices to your customers a lot faster. Also, you can try incentivizing them to pay faster by offering discounts for early payers, as well as discourage late payments with adequate penalties in place. Overall, your invoices should be clear and predictable, to avoid any confusion (and missing payments) that may arise due to a lack of billing information concerning the total amount.
2. Business Loans
Loans are probably the most straightforward way of injecting funds into your business. Yet, if you’re a small business that just recently started out, you may not have enough assets to place as collateral — apart from your own house and car — to secure these loans. If that indeed be the case and you do not wish to risk losing some of your personal assets, then fast unsecured business loans could be your best option. With these you do not have to offer anything up for security, the payouts are much faster, and there is no assessment of your credit rating; meaning, anyone can apply for these loans, even people with poor credit histories.
3. Accept Electronic Payments
Modern times call for modern payment methods. Allowing your clients to pay with their credit cards is not only convenient but faster as well. Instead of waiting the usual 30 to 60 days, you can receive payments in less than 3 business days, without having to bill them yourself. The only downsides are the (almost negligible) monthly and percentage fees you’ll have to pay for each transaction. What’s more, this opens up a whole new avenue of compensation — electronic payments. These include PayPal, mobile payments, and so on. In general, you want to provide your customers with as many payment options as possible to make it easier for them to make a purchase.
4. Raise Your Prices
In the past, lowering the prices of all of your products may have seemed like a good idea (at the time); in hindsight, not so much. You can’t expect to make a profit when overhead expenses and the costs of supplies outweigh your product prices. In the end, no matter how many new customers you manage to attract, you would still be operating in the red. The simplest way of fixing this blunder is to up your prices to a higher, yet reasonable sum. Consequently, you’ll get additional cash pouring in, buying you some more time while you wait for those late payments.
5. Reduce Expenses
Solving cash flow issues could be a simple matter of cutting down on your overhead costs. These include your business’s telephone and utility bills, office rent, maintenance, etc. Now, if your overhead expenses are higher than your monthly income, you have to consolidate and cut some corners. To do this effectively, you need to conduct a full audit to check where there is potential leakage and plug the holes that are draining your finances. If, for some reason, you cannot lower these expenses any further, consider renegotiating with your suppliers and getting better deals. Sometimes, this can be all it takes to get your finances back on track and have healthy cash flow; therefore, do it often. In the end, it all comes down to common sense. Don’t spend more than you have to and upgrade the ways you process funds from your clients.