Dealing with Common Cash Flow Problems
Business owners often find that they struggle with cash flow problems. They can happen especially when they first start up.
Perhaps you’re finding that it’s hard to get your customers to pay promptly. Or you have found you don’t have enough capital to grow.
Whatever your problem is, you can always find a way to correct it. Hundreds of businesses before you have experienced the same issues and solved them.
If your money seems to be going out faster than it’s coming in, try some of these solutions to fix the problems.
Encourage Prompt Payments
One of the problems that can be difficult to fix is customers taking their time making payments. You know you’ll get the money eventually, but you clients aren’t in any hurry to send it to you.
To improve on this issue, you can start by sending out your invoices as soon as possible. The faster they receive the invoice, the faster they can pay.
You can also give them a deadline by which they need to pay you, with clear instructions for what will happen if they don’t pay on time.
Make it easier for people to pay too, for example by allowing credit card payments.
Find the Right Financing
If you know you’ve got enough money coming in but it’s just not happening at the right time, it can help to look for additional financing.
You can borrow the money and then pay it back as your invoices are paid. While you’re waiting for your clients to catch up to you, you can continue to pay your staff.
You’ll be able to spend money on marketing and take care of your own invoices from suppliers.
When you’re fed up of waiting to be paid after having already completed the work, you can try asking for the money upfront.
It doesn’t have to be the whole amount for the work you’re going to complete. You could ask your client to put forward enough to cover half of the work and have them pay the rest at the end.
If you want to take this route, you probably will have to build up a good reputation first. People want to see that their money is in safe hands before they give it to you.
You can consider using an escrow account so that your customers know their money is safe until the work is completed.
Raise Your Prices
When you’re first starting out, you might have set your prices quite low. Now you may be realizing that they’re not high enough to cover your expenses and grow the company.
Putting your prices up could be the solution, but you have to do it in a sensitive way. Be prepared to lose a client or two, but remember you can find more.
You may be better respected when you’re willing to value your services at a higher price.
Sorting out your cash flow problems shouldn’t be too difficult.
Once you identify the issues, finding the best solutions should be simple.