You might think that eliminating your cash flow problem sounds like a dream come true, but feel as if it’s too out of reach for you to do anything about it. However, below, you’ll find 5 ways you can effectively eliminate your cash flow problem so you can finally run your business or freelancing gig with confidence. Read on for some suggestions.
Consider Your Borrowing Options
You could potentially bring money into your business with a business loan or a credit card advance. Just bear in mind that if your business has an intrinsic problem causing your cash flow crisis, then taking on debt will only put a band-aid on the problem and you’ll still need to come up with a better solution.
Cut Your Expenses
You should always be able to look closely at every penny that leaves your business bank account and find ways of cutting back. Eliminate all unnecessary expenses and only spend on the costs that keep you operational and generate revenue. You should only be spending money on what is necessary when you have a cash flow problem.
Manage Your Payables Strategically
Your expenses can grow quickly as your business expands, so hang on to your available cash as long as you can. Pay invoices close to the due date (don’t pay them late, though, or you’re putting somebody in a similar position to you). This way, if your business runs into unexpected expenses, you’ll have more cash on hand to cover the costs. If you have decent cash flow and you are offered an early payment discount then take it. Even a small discount can add up to big savings. Just ensure you know that this is doable with the cash you have available.
If you have unpaid invoices yourself that you’re waiting to be paid, a service like Invoice Discounting can help you to free up the cash. Just bear in mind that you may want to use this as a last ditch attempt to get the money, as you don’t want to ruin your relationships with clients.
Come up with Cash Flow Predictions
Gain insight by coming up with cash flow predictions around once a month. You could also create an annual cash flow projection for two and three years out. Without cash flow predictions, it’s all too easy to encounter a cash flow problem that you struggle to fix.
Get Rid of Outdated/Excess Equipment
If you have old equipment lying around and taking up space, make sure you get rid of it. Sell these items on and invest the cash into something you can really use. When selling equipment, you may also be able to boost cash flow through potential taxable gains. You may also want to lease the devices that you need, which could give you the latest technology but ensure you’re not forking out massive amounts at a time. This will be more energy efficient as well as better for your bank balance.
A cash flow problem can become more serious if it isn’t dealt with. Use this advice today.