There are many reasons why companies run into problems with cash flow including; carrying too much stock, unexpected changes in trading conditions and offering too much credit. As long as the business is not trading at a loss, however, there are also many ways to solve the problems. Here we look at how to bolster your business’s cash flow.
Rationalise your Invoicing Protocols
It is often the case that problems with cash flow occur when, for one reason or another,. Getting them to pay up front may be one way to improve the company’s cash flow. If this is not an option, then ensuring invoices are sent out promptly and followed up if not paid within the agreed timeframe is good practice. Also, make sure that the payment terms aren’t too long – 30 days’ maximum.
Another way to help bolster a company’s cash flow is to use anservice such as those offered by . The process involves releasing the capital from accounts receivable, that is to say the money that is owed to your business by customers.
To do this you provide a copy of outstanding invoices to the lender, who in return pay you some or all of the money that is outstanding. The customer then pays the money back to the lender directly. The service is fast and doesn’t involve huge amounts of administration.
Get a Business Credit Card
Using a company credit card can also be an option for businesses who are looking to bolster their cash flow. Paying bills or suppliers with the credit card can give you some much needed breathing space, although you need to check the terms and conditions for repayments otherwise the process could begin to eat into your profits. Settling the balance of the card regularly will help avoid this and businesses that do not do this risk running up a debt they may find difficult to clear.
Speak to an Accountant
Companies that regularly consult an accountant are far less likely to experience cash flow issues, but if they do they may well find that retaining the services of an accountant becomes a good investment and not a cost.
When it comes to bolstering a business’sthere are as many solutions as there are roots of the problem and so resolving the issue is just a case of finding which way best suits your company.