There are all kinds of reasons why your business might suffer from a cash-flow crisis.
If you run a seasonal business, you might suffer losses at certain times of the year.
Your customers might migrate to your nearest competitor if they are dissatisfied with your business, for whatever reason.
You may have had to cater for unexpected expenses, perhaps because of equipment breakdown or damage to your premises.
For these and other reasons, your business will be hit hard should a faltering cash flow be the consequence. You might struggle to pay staff or cover your bills, for example, and the long-term future of your business might appear to be under threat. However, to ensure your survivability, there are ways to get your finances back on track.
#1: Consider financing options
The last thing you want to do is get yourself into (more) debt, but if you need a short-term loan to get you out of a jam, you might consider it. Companies such as SummitFR are a good bet as they can fast-track funding into your business account with a range of financing options, including invoice factoring and inventory financing. You might also research the range of small business loans available to you online, opting for those that have a better rate of interest. And you might want to reach out to your investors to request an injection of cash. Research all of your options, and then consider the following pieces of advice.
#2: Contact your creditors
If you are going to struggle to pay any of your creditors on time, be that outsourced firms who have done work for you, or a billing company such as your internet provider, don’t bury your head under the sand and ignore the fact that you can’t pay them. Let them know, ask for an extension of a few days or weeks, or come to an agreement over a payment plan where you can pay them back in installments. If you already have a strong record of making payments on time, then your creditors may allow you some grace over the matter.
#3: Cut down on your spending
There are some expenses that will need to be covered at some point, but form a cost-cutting strategy for any of your non-essential expenses. If you have plenty of office supplies, for example, you might want to cancel your next order shipment. Or you might have subscriptions to trade journals that are not necessary to the day-to-day running of your business, or lunch orders to feed your staff that should be canceled in favor of them bringing their own food to work. Look through your bank statements and sit with your accountant, and freeze any expense that isn’t going to threaten your business. And then look at the expenses that are necessary but where savings can be made. You might migrate to a cheaper office supplier for example, and you could switch utility and insurance providers if you can find a better deal elsewhere.
#4: Increase your prices
As a business owner, you might be reluctant to do this in fear of scaring away your customers. However, if you have already reduced the prices of your product or service to attract more customers, you might still have room to raise your prices to a small degree. You might also offer incentives to your customers to account for the raised prices, such as free postage and packing, but do the math with your accountant to work out a plan that won’t put you at a further loss.
Finally
We have covered just a few of the steps you can take, but do your research online to discover more. Should you get back on your feet financially, be sure to take measures to protect yourself from further issues. Use free marketing strategies to generate more custom, put more money into your savings and emergency fund, and research ways to better your rivals. By doing any of these things, you can reduce the chance of a cash-flow crisis happening to you again.
Let us know what you think, and if you have any other tips for our readers, be sure to let us know!
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