Money waxes and wanes. Like the tides, it comes in and goes out and sometimes, the tide leaves you high and dry – just surviving.
Cash flow problems are a normal phenomenon when you’re doing business. But you can fix the problem with some smart tweaks to stop them having their way with your business.
Here are our tried and true tips for fixing your business’s cash flow problems. We hope they’ll serve to lift your boat well out of harm’s way.
The Usual Suspects
Knowing what’s at the root of your cash flow problems is key to strategizing around fixing them. While there are plenty of contributing factors, following are 3 which figure more prominently than others:
- Sales – this is one of the usual suspects when it comes to cash flow problems. The key to fixing it is knowing why sales are low. Is the price point too high? Is what you’re selling not hitting home with consumers? Is your sales and marketing letting you down? It could be a combination of all 3.
- Expenses – if you’ve ruled out sales, your next stop is expenses. Are these unaccountably bloated? Tracking expenses as a matter of course (and not just when things are slow) is a best practice which can help you stop the unnecessary bleeding.
- Collection – having eliminated sales and expenses, you’re still looking at a problem. That might mean the problem is in customer payment. It’s great to make a sale, but if you’re not paid for it, you may as well have not made it. Chasing unpaid sales is costly.
Whatever the problem is with your cash flow, there are some simple measures you can take to boost your liquidity.
When a rapid injection of revenue is required, a flash sale is a good way to get it. Executed well and properly marketed, this style of raising required money may not offer huge profit, but that’s not what you need right now. You need cash and this strategy can get it for you.
Raise Your Prices
Goods are flying out the door apace, but cash flow is still a problem. That may mean that you’re just not charging enough for your goods or services.
While price-sensitive customers may bolt, the bulk of your clientele will roll with the punches and stick with you.
Is collection the problem with your cash flow situation? Then you probably need to examine your invoicing practices.
Don’t sit on your invoices. Send them out as soon as goods or services are rendered to the buyer. Invoices should be clear and detailed and set a deadline for when payment is to be received.
Clarity is key to getting your invoices paid. But getting them out on time leaves no doubt that you’re serious about being paid in a timely manner.
Cash flow problems are best fixed early on. Don’t let them fester. Be proactive to keep your business healthy and solvent.
Let Norton Financials take the books off your hands. Contact us.