Cash Flow: Common Issues and Solutions

Cash Flow: Common Issues and Solutions

One of the biggest reasons why businesses fail is due to cash flow issues. If an emergency or unexpected expense comes up, it can be the last straw fiscally for many small businesses. Experts recommend building a reserve equal to your operating costs for three months to keep available for a financial crisis. Cash flow issues are common- but there are some ways to circumvent or solve the situation

Slow-Paying Customers

Some customers pay slowly- which can impact your cash flow situation. Provide an incentive for your customers to pay faster, like a discount or reward of some kind.

High Overhead Costs

Are your overhead costs causing you the cash flow issue? If your rent, utilities, and costs of operating are too high, you may need to make some changes. Can you move your business? Audit and cut expenses wherever you can without impacting your product or services.

Too Much Inventory

Too much inventory on-hand is another problem that can impact your bottom line. When merchandise sits on shelves in storage, it is not making you money but could be costing you. The best way to avoid this conundrum is to reassess your inventory and ordering protocols. Consider volume and future sales forecasts to try and order more prudently.

Poor Bookkeeping

Poor bookkeeping can hurt your business. This can make it impossible to track and identify issues as needed- and could be problematic at tax time. The best solution and way to protect your cash flow is to hire a bookkeeping professional to maintain your books. The convenience is well worth the cost.

Bad Debt

Unfortunately, some clients or customers will not pay their invoices, which is considered bad debt. The best way to circumvent bad debt is to only extend credit to those with a favorable credit and payment history.

Got a cash flow issue? Use these tips to find a solution. Talk to the money experts at Green Apple Funding to learn more about your options.