Managing your cash flow is essential if you’re going to survive as a small business, and ideally you want to maintain positive cash flow at all times. There are a number of ways which you can use to address cash flow problems in your company so that it doesn’t reach the critical point. Here are some of the best proven methods for maintaining positive cash flow with your small business.
There are more short-term financing options available today than ever before. In addition to business lines of credit which can be used to make emergency purchases, or to cover shortfalls of revenue, you can avail yourself of various new financial products from alternative lenders. Most of these short-term financing options feature very quick cash acquisition, and short repayment periods.
Longer-term financing is still available from banks and other lending institutions, although approval rates have dropped drastically since the great recession of 2008. However, if your company has excellent credit history and has been in business for a while, you may qualify for long-term financing.
Speed up receivables payments
There are a number of things you can do to speed up the payments you receive on your invoices. For instance, you can invoice customers immediately after purchases have been made, rather than have a billing cycle which runs once per month. You may also want to offer discounts to customers to encourage them to pay more quickly, and keep your flow of incoming revenue steady.
If you have money tied up in equipment or other assets which is just laying around and not generating income, you should consider liquidating it. If inventory has been laying around in your warehouse collecting dust, this is something else that should be liquidated for whatever cash value you can obtain from it.
Unless your vendors have supplied some compelling reason for you to pay early on your invoices, you should delay payments until the last possible date. Of course you don’t want to risk late fees being applied to your bill, nor do you want to damage relations with your suppliers. However, the longer you hold on to cash, the more it can work for you, rather than for someone else.
Does your company have cash flow problems?
At some point in time, almost every small business will run into cash flow issues, and if you don’t have a ready answer for those issues, it can be extremely harmful to your business. To avoid those problems with cash flow, contact us at Durham Commercial Capital, so we can work with you to provide the capital which will keep your business operating smoothly.