5 Strategies to Lessen Your Financial Problems
Cash flow issues are a problem for many business owners. Even companies with steady clientele can run into this issue. Fortunately, there are ways to maintain control and keep operations running as usual. Here are five ways you can do just that:
1. Make it Easy for Clients to Pay
One of the best ways to ease your company’s cash flow problems is to bring more money in the door. You can do this by making it simple for your clients to pay their invoices. By using an auto-billing system or accepting online payments, you can make it much less likely that your invoices will be left sitting unpaid on your client’s desk for months.
2. Create a Buying Cooperative
Suppliers will often give discounts to large companies with bulk orders. If your business is smaller, reach out to similar organizations to create a buying cooperative. Together, you can pool your money and negotiate for lower prices on supplies.
3. Check Your Inventory
Sometimes, cash flow issues stem from products not moving as fast as others. Perform an inventory check to see which goods are moving and which are stagnant. Sell anything tying up your cash flow, even at a discount.
4. Refinance Your Assets
Some companies need to use large equipment, such as machinery and vehicles, to carry out their day-to-day operations. Unfortunately, these items can quickly tie up their capital. If your business fits into this category and is currently suffering cash flow difficulties, it may be a good idea to sell your equipment and lease it back for use. Doing so can free up the funds you need to pay your recurring expenses. If this is not an option, you may want to consider selling your unpaid invoices for immediate access to working capital.
5. Take Out a Bridge Loan
Bridge loans are widely available to companies that need a short-term increase in cash due to a specific event. For example, if your business is relocating to a new site, you may have reduced cash flow until your old site is sold. These loans generally last for less than a month. They are designed to support businesses until they get a long-term financial solution. However, they do tend to come with a high interest rate, so be sure to pay it off quickly to avoid further financial trouble.
The Bottom Line
Cash flow concerns are a headache for business owners. This issue can lead to further financial struggles if it is not fixed. However, as outlined above, there are plenty of ways to improve your cash flow situation in both the short and long term. If you can’t decide on the right solution for you, a brief conversation with your accountant or financial advisor should give you the answers you need.
About Universal Funding
Universal Funding is a private funding source that has funded thousands of businesses and more than $2 billion since 1998. We turn your accounts receivable into the funding you need through invoice factoring and can have capital in your hands in a matter of days