3 Major Cash Flow Challenges You Can Remedy
Many of us aren’t natural-born bookkeepers, but as business owners, having a basic understanding of the concept of cash flow is vital. When you can more properly manage how cash flows in and out of the business, you can not only get a firmer grasp on your financial day-to-day but you can prepare for the expenses to come – even those that are a little more unexpected.
Here are 3 big cash flow challenges we frequently hear about that can be met and solved with adjustments that are easier than you may expect:
“I’ve Got Bills That Need To Be Paid.”
Yes. But do those bills need to be paid as soon as you receive an invoice? Probably not. So why give yourself undue stress by paying it early? This doesn’t mean putting it off – don’t do that. But if the bill is due in 30 days, pay it electronically at that time. If an expense happens to come up in the interim, you’ve allowed a buffer for that too.
“I’m Always Waiting On A Check Or Two I Shouldn’t Have To.”
True. You shouldn’t have to wait for checks. But be honest about your part – are you consistent about when you send invoices out in that it’s always the same time each week or month? Or is it something you get to later on after doing the actual work? When invoicing isn’t a part of your regular schedule, you’re not making it important enough and inadvertently hurting your cash flow in the process. Schedule it with no exceptions.
In addition, think about what kind of incentive you could offer to clients that pay early. Might they get a small discount on the overall bill if they pay well before the due date? This gives you more funds in hand earlier on so you can be less worried about getting everything in right at the end of the month.
“Buying This New Equipment Will Hamper My Funds For A While.”
Do you have to necessarily buy it? What long-term financing options are available? You may be able to lease the equipment so that you can utilize it today without crunching your funds so much more here and now due to an outright purchase. Even if you wind up spending more on the item over the long run, what you may save in the present for your business may allow you to invest in other necessary items as well. A full purchase may not afford you that flexibility.