Work & Business

5 Cash Flow Concerns (and How Your Business Can Overcome Them)

5 Cash Flow Concerns (and How Your Business Can Overcome Them)
  • PublishedJune 5, 2023

Cash flow is an essential component of a healthy business. If cash flow is positive, you shouldn’t have an issue with covering your bills and continuing to function as expected. Cash flow issues, however, result in the opposite effect. 

A small business can be particularly crippled by cash flow problems. All it takes is a few missed invoices and late payments to send a business into a perilous position. To avoid that type of situation, here are five cash flow concerns your business needs to overcome.

1. Not anticipating your future cash flow situation

One approach you should change up – if you haven’t done so already – is to make continual financial projections. 

By paying close attention to your cash flow data, you can better understand what is going right, what is not working, and build a better financial strategy with this information. With accurate, up-to-date projections, you are able to predict your future cash flow. 

Due to this, you will be able to make better decisions and keep your business financially secure.

2. Unpaid sales invoices stopping you from covering expenses

If unpaid sales invoices are causing you problems with paying your bills, there is a method to turn these into the money you need: confidential invoice discounting.

With confidential invoice discounting, you gain funding from your unpaid invoices. This is feasible as a financial company supplies prepayment against your invoices. For example, if you had a £10,000 sales ledger and the financer supplies an 85% prepayment against this, you can gain up to £8,500 immediately. Add in the confidentiality, and your customers will be unaware of you using invoice discounting. Talk to a finance broker to get the best deal you can on invoice discounting. 

3. Customers not receiving invoices immediately

Have you been a little lackadaisical in the way you send out invoices to customers? If these are being delayed by a day or two, it’s time to change that approach right now. Sending out invoices as soon as an order is made gives customers less time to delay making payments. 

4. Limited business finance avenues

The more ways you can bring in money, the more you can battle against cash flow issues. For instance, along with the aforementioned invoice discounting, another method to get a quick injection of cash is to sell off business assets that are no longer required. 

Unless you have just started out, it is likely you have accumulated a few assets which are largely redundant and not used. This could be everything from a piece of machinery to old computers. 

Rather than let these gather dust, turn your unnecessary assets into money to boost your cash flow instantly. 

5. No cash in reserves 

If you’re struggling with cash flow right now, trying to save up some money in reserves can seem some distance away. However, it is highly recommended you begin building up a nest egg to help with cash flow in the future. 

Simply put, you never know when a rainy day may strike and compromise your cash flow. When you have a sizeable sum of cash tucked away, this can help you overcome this issue and keep the cash flowing. 

Like these tips? Check out our business guides including: How to start your own online business and how to use intelligent business systems.

Written By
Gesten Van Der Post

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