It’s not an overstatement to say that cash flow is literally the lifeblood of any business, and if your company has problems with cash flow, it can be a serious disruption to your operations. The time between when you have to pay employees, and payments from customers start flowing in, is the make or break time for most businesses. Some of the best ways to maintain steady cash flow and avoid those business disruptions are discussed below.
Project your monthly cash flow
Your monthly cash flow projections will be comprised of available cash on hand, plus projected incoming customer payments, earnings from interest in service fees, debt collections, and additional sources. From this general knowledge, you should proceed to a detailed schedule of how much cash is coming in from each of those sources, and when it should be coming in. Against that, you should balance the known outgoing expenses for all your normal business operations.
Improve your receivables process
The basic premise behind improving your receivables management is to shorten the time between invoicing the customer and receiving payments. To accomplish this, you can provide incentives to customers to pay early, ask that customers make deposits on larger orders, and ensure that invoices are sent out promptly after purchases are made.
Manage your payables
Some things you can do to manage your payables a little better include the following: make greatest use of your creditors’ payment terms, use electronic funds transfers to make payments as late as possible, and to maintain communications with your suppliers, so they understand your financial status.
Strategize to survive shortfalls
Even when you manage your cash flow very well, there will still be situations where there’s a gap in that flow that has your business struggling to survive. When this does occur, there are a number of strategies which you can use to overcome the situation, especially if you are alert to such developments as early as possible.
One of the best ways of handling cash flow shortfalls is to establish a business line of credit, and if you can’t secure one of these from a lender, you can still take advantage of alternative lending products which will place funds in your hands quickly. Some of these include invoice factoring, merchant cash advances, and purchase order factoring, but there are even more ways that creative financing can help you to survive temporary cash flow shortfalls.
Improve your cash flow with GrowthCC
If your business is plagued by gaps in cash flow for whatever reason, it may be that we can help relieve that stress at GrowthCC. Contact us at your convenience, to consult with our financial experts about how to achieve a steadier cash flow, and possibly arrange for financing that will smooth over gaps in your cash flow.