Complete Guide To Corporate Finance

The Business Finance Guide

Cash flow problems basically refer to situations when money is not available for use when businesses really need it. As the name implies, money is not moving or not moving as it’s supposed to. Cash flow problems have several symptoms, from not being able to pay staff salaries on time, to partial or complete lack of funds to take advantage of an opportunity to grow your business.

In this piece, we will guide you on how you can rectify such problems when they arise.

Develop a Business Budget

If your cash flow situation is cyclic, you should create a detailed yearly budget. A budget is necessary for both when starting out and when continuing. You’ll also need a pro forma budget for when you need to seek extra funding.

Get a Line of Credit

A very effective way to deal with cash flow problems is to work with a local bank in setting up a line of credit. Often called “working capital” credit lines, the loans are important in helping put money into your account so your business can get by, then pay back later once you get funds. Credit companies like Outsourced Credit Control in London can also provide such assistance.

Establish Favorable Credit Terms with Trade Partners and Suppliers

Another thing to consider when your cash flow hits the rocks is to review, negotiate and update terms with your trade partners. You can choose, for example, to inquire if you can extend payment period from thirty days to say, ninety working days. If this works, it will enable you to hold on to some cash for a longer period.

Also, explore getting extended payment terms. If you can hold on to a bit more cash, you’ll be able to settle some other nagging issues while you wait for more money to come in. Consider this to be a sort of line of credit granted by your suppliers seeing as you’re receiving goods or services at this moment and you can pay them later.

Apply for a Short Term Loan

Obtaining short terms loans are relatively easy and take little time to process. There’s a catch though: they usually have a higher interest rate. If you have a seasonal business, it’s even better as seasonal businesses experience periods of great fluctuation and you can forecast the income changes accurately, so you’ll have a pretty good idea of when you can pay back.

Start Collecting Your Debts

The bane of every business is accumulated debts, and some customers can be really frustrating. It’s commonplace for defaulters to take advantage of smaller business thinking they can get away with not paying up. Once a customer starts to behave funny, you should hire a debt collection agency for the sake of your business. There’s nothing worse than having people owe you when you need money. Hire a reputable debt company like Racing Credit Control and rest assured you’ll get your money back in no time.


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