Small Business Owners list cash flow issues and financing among their biggest worries.
Even if your business is profitable, cash flow issues can cripple your ability to meet your daily operating expenses or payroll and may entice you to rack up delinquencies and late fees. For small businesses with a seasonal sales cycle, the looming months of limited cash flow is a prevailing worry. With money tight and bank loans difficult to obtain, many small businesses fail to meet their potential or in the worst-case scenarios, fold under the financial strain.
Step One to Managing Cash Flow Issues:
The first step to managing your cash flow issues is to analyze the cash flow in and out of your business. You need to evaluate not only the amount of cash coming into and out of your business but also the timing of the flows. By seeing your monthly cash flow in compared to your cash flow out over the course of a year, you can then begin to devise a budget for riding out the lean months. Many accounting software packages offer Cash Flow Reports or you can find free templates on the internet to help with your analysis. Check out CORE’s Cash Flow Template for a helpful 12-month template to get you started.
Step Two to Managing Cash Flow Issues:
After analyzing your cash flow issues the next step is to evaluate the timing of the flow in and out. Can you negotiate extended payment terms with your suppliers? Are you able to shorten your invoicing cycle to your clients that are leveraging payments to your detriment? Make sure that you weigh this option carefully and balance the value of the client to the drain on your cash flow as you cover their business expenditures.
Step Three to Managing Cash Flow Issues:
After carefully evaluating your cash flow, budgeting for the lean months, maximizing your payment terms and minimizing your payment terms the next step is to consider a Merchant Cash Advance option. A Merchant Cash Advance gives you access to quick funding for renovations, stocking inventory or managing expenses during the lean months. The best part of a Merchant Cash Advance is that you don’t have a set monthly payment; the payment is a percentage of your daily credit card sales so it automatically fluctuates with your incoming cash flow. A Merchant Cash Advance can be a great option for giving your small business the kick start that it needs for a successful New Year!