What To Do if Your Business Struggles With Low Cash Flow

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Cash flow is one of the most important facets of every business. With proper cash flow management, your business can pay its bills on time, grow while maintaining its profit margin, generate higher productivity, and avoid crippling debt and cash-flow crunches. 

But what happens when you manage to find yourself in a difficult situation and your business struggles with suffering low cash flow?

Consider an emergency loan

A line of credit is an excellent means to improve your company’s cash flow and help you avoid having to make large cash payments. But if you plan for short-term needs, consider an emergency loan. 

If business owners anticipate their cash flow issues being temporary, then loans for business can provide them with a much-needed cash infusion until things return to normal.

Accelerate your receivables

High-paying customers are essential for any business that needs fast cash flow. Speed up the collection process of your receivables by automating the collection process. Use an advanced invoice management solution to track your receivables and remind clients of the payments they owe you.

Advanced analytics can also optimize your sales funnel and invoice management to maximize your collections.

Choose the proper payroll cycle

Another factor that impacts your company’s cash flow is payroll frequency. If you have difficulty meeting your payroll obligations, consider restructuring your pay cycles. Opt for a weekly or bi-weekly payroll cycle to align with your cash flow needs.

Improve your inventory management and purchasing decisions

Inventory management can have either a positive or negative impact on your company’s cash flow. Inventory can be part of your company’s product pipeline and boost your company’s cash flow if managed effectively. 

However, holding inventory for too long can result in excess inventory. “Deadstock” takes up valuable real estate, distracting your attention from other aspects of your business. If you are having problems with your in-stock levels, consider placing a higher emphasis on purchasing strategically and reducing the amount of inventory you keep in stock.

Pay bills strategically

You will also have to manage the bills for your business. Be picky about the bills you pay immediately and which ones you can delay until you have more money in your bank account or can secure financing.

If possible, consider breaking them down into smaller payments spread over time, which can be much easier to make and will not significantly strain your budget. Paying your bills with strategy will substantially improve your company’s cash flow.

Negotiate your payments with suppliers

There is no need to be too proud to ask for help. Negotiate with your supplier for a payment extension. If you pay suppliers on time, they will typically be more willing to extend their payment terms. 

Getting creative with handling your space will help you get through a crisis faster and more efficiently.

Raise investor capital

As a last resort, if you are facing a cash-flow crisis, consider raising money via an equity investor. Investors typically want to see that your business can generate revenue. They will also look at your brand value and the strength of your customer base. 

If you have already tested the market and have shown that your business is scalable, it will be easier for you to win an investment.

Before you go

Remember that a timely and adequate money supply is essential for your business to operate. Now that you know how to manage your company’s cash flow, you will no longer have to worry about missing a payroll cycle, defaulting on loans, or having other payments returned due to insufficient funds.

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