November 9, 2017

6 Easy Steps to Overcoming Your Cash Flow Challenges

It’s not uncommon that entrepreneurial businesses face a cash flow crisis from time to time – whether it’s because of client’s delayed payments, expenses rampaging out of hand, or simply a lack of profit.

There are ways around it however, with these 6 core tips to help keep your cash flow in check, and avoid the challenges entrepreneurs might be facing when it comes to finances.


1- Get organized:

Let’s start with the basics — what’s your accounting and finance infrastructure look like? Are all your books in order? Are you invoicing your clients on time? Staying organized and on top of your finances coming into and leaving your company is crucial if you want to understand how and where your cash flow is heading.


2 – Keep a cash forecast to avoid future shortages:

The most basic way to set up a cash forecast is to keep a simple spreadsheet that lists your income and costs on a monthly basis. By setting up a quarterly spreadsheet to go over all your expenses will enable you to maintain your day to day business needs, and you can then easily anticipate the possibility of future cash shortages and usually take steps to avoid them, as well as anticipate seasonal highs and lows.


3 – Get to the heart of the problem:

If you’re stuck in a cash flow rut, it’s important to ask yourself as an entrepreneur what the underlying causes of your cash flow challenges are. The key is to plan ahead — Have weekly, monthly, annual, and also 5-year financial goals. This should help you stay in line, but if cash flow problems still occur, you’ll know it’s because you’re missing your targets and need to focus on your business structure, maybe you’re not pricing your services and products correctly. Inevitably, if you address the source of the problem, it’s symptoms will disappear.

Take a look at this article, to better understand 10 Ways to Raise Your Prices without Losing Customers


4 – Reduce expenses:

A little like old-fashioned saving, reducing your expenses might really help on a rainy day. Let’s start with your vendors — don’t be afraid to ask your current vendors for lower rates, and look around for new and competitive prices and options. It’s also a good idea to identify the areas where you might be over-spending — too many office supplies? Software licenses you don’t need? Diagnose what exactly is sucking up the most cash and treat it immediately.


5 – Opt for a retainer, or get a portion of your money upfront:

The best thing about retainer clients is that a monthly cash flow is guaranteed. However, you will also come across project-based clients, which is fine, but that also means your monthly income will vary. Our advice is as follows: when you negotiate your project deals, make it a strict policy to get a percentage of your money up front, especially if you are working on a long term project.


6 – Be open to tools of technology:

The reality is that we live in the day and age of technology. You should be ready to offer credit or debit card payment options, e-payments, and explore mediators such as PayPal or Skrill.


The benefits of a healthy cash flow definitely outweigh the cost of credit card processing fees by far! Your system for invoicing clients must be up to date and fast acting, and don’t be afraid to resort to the array of bookkeeping and accounting software and technology that’s now available on the market.


In the end, it all filters down to how organized you are as a business owner. By following the steps above and staying on top of your finances with proper planning and appropriate use of technology, you’ll be able to foresee a cash flow crisis beforehand, and avoid it altogether.



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