Cash flow problems can hamper even the most profitable of businesses. On occasion, it is simply a matter of timing. You have outstanding invoices that clients are slow in paying and yet the money still has to go out to cover your expenses and debts. This is the type of situation in which you might come up against a cash flow crunch; meaning, you won't have enough money on hand to cover things like payroll, rent and those everyday incidentals that can crop up.
So what are some ways in which you can help boost your cash flow and therefore not be in a situation in which you are panicked about being able to cover your costs…
- Keep up with your invoices. The worst thing you can do is to let an invoice sit. The longer you wait to send it out, the longer the money will be in coming in. Sending out the invoice immediately after the product is disbursed or services are rendered is critical.
2. Revisit your inventory. Products get stale; they sit on the shelf. Are you purchasing inventory that is basically going nowhere? All this does it to tie up otherwise valuable cash.
3. Implement penalties for late payments. If in fact a client isn't paying and is subsequently avoiding your calls and emails, then it may be time to institute a penalty system if you don't already have one. A certain percentage is charged for instance, for every 30 days past due.
4. Make your cash work for you. When you do have extra cash, it may be wise to invest in some sort of high-interest savings account that allows you to still access the money when needed but lets you earn on the funds you do save.
If you are experiencing something of a cash flow crunch, First Union is here to help. A line of credit may be just the thing you need to get your business back in the swing of things and give you a bit of a cushion until you can collect on those delinquent invoices. Call today and let's get started!