Cashflow problems are more common than we may think, especially for those businesses that are just beginning or are just in the process of establishing themselves.
But even for long-running businesses, cashflow issues occur once in a while as well.
But if you have a business and are experiencing an increasing amount of cashflow difficulties and simply do not have enough cash available to pay your bills, settle your accounts, or even pay your employees, then you may need to take certain measures in order to keep your business from running aground.
What to do when you don’t have enough cash
When you have run out of cash to pay your own suppliers, your bills, and settle your other expenses, do not panic. The worst thing you can do is start panicking and hide from your creditors. The best thing you can do, on the other hand, is face your cashflow issues head-on by talking to your bank or your financier as soon as possible. The earlier you talk to your financier, the better you will be able to handle your cashflow problems. It would also be a good time to look for cashflow financing options such as invoice discounting and factoring from providers such as Ultimate Finance. With these types of cashflow solutions, you can receive an advance based on the amount of your invoices, which will certainly go a long way to ensuring that you can pay your suppliers and bills on time.
It would also be in your best interest to speak with your suppliers as soon as possible, even before the due date of their invoices. The earlier you inform them of how things stand with your finances, the more flexible they can be and the more likely they will be able to give you an extension. Then you can make arrangements with your financier and cashflow provider to extend you the cash you need without worrying about late payment charges and losing your credibility with your creditors.
What to do to avoid cashflow issues
Carefully plan your cash requirements
Whilst cashflow issues stem from a number of valid reasons, there are still some things you can do to at least diminish the risk of this occurring. One thing you can do is plan your requirements in cash very thoroughly and carefully and also allow for payment term differences between your own suppliers and your customers. Estimate how much you would need to bridge the difference between the payments you receive and your own expenses.
Keep your cashflow forecast updated
In addition to this, you have to make sure that the forecast you have made for your cashflow is updated regularly. You need to keep a careful watch on your forecast, so you will be able to know in advance if you have to take certain measures to get the financial reserves you need.
The right combination of knowledge, preparedness, and foresight is essential to addressing cashflow issues. The key is also to face your problems head-on and not avoid them. Speak to the necessary parties – such as your bank(s), your suppliers, financing and cashflow solutions providers, and even your employees – in advance, and you will be surprised at how much easier it will be to deal with cashflow issues even before they arise.
Main image source: Ken Teegardin @ Flickr, second image source: Images of Money @ Flickr, third image source: Simon Cunningham @ Flickr.
