How to Deal With Cash Flow Problems in Small Business [5 Ways]

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Steady cash flow is a crucial component in the success of a business. 

If you’re evaluating how to enhance your business cash flow, then you’ve come to the right place. The points below outline five effective ways to manage your cash flow to keep your business running smoothly. 

1) Create a Cash Flow Forecast

A cash flow forecast is a planned prediction of how your business will perform. In other words, if you know that a certain week, month or season generally brings in more or less revenue, you need to plan a way to maintain cash flow during those times. As you track expenses throughout the year, compare the actual numbers with your forecasted numbers to adjust your estimates for the following year. 

2) Audit Your Bookkeeping

Another great way to improve cash flow is by conducting a thorough analysis of your bookkeeping. 

Make sure you have a system in place to keep track of all your expenses, invoices, and payments. For example, if you don’t have a precise record of each client, when their payment is due, and how much they owe you, then you may never get a payment from that client and you will lose that revenue. If your bookkeeping is sloppy, you may not even realize this is a problem. 

You should also keep a record of suppliers and how much they are charging you for their products. You may be able to find a better deal from someone else, or renegotiate for a lower rate when you’ve already established a business relationship. Make sure you have detailed information about every business transaction that takes place. It will save you a lot of money and is an inexpensive way to improve cash flow.

3) Streamline Debt Collections

Next, take a look at your current debt collection process. Is there a way you can make it more efficient or effective? Is there a way you can incentivize on-time payments or discourage late payments? 

You also need to check all your due dates and make sure they line up. For example, if you owe a supplier, but have not been paid by a client, you may not have the cash flow needed for your expenses. Try to arrange your debt due dates to correspond with incoming cash flow by reaching out to suppliers and service providers. They may even allow you to pay quarterly or semi-annually instead of monthly. You can also make it easier for clients to pay you more quickly by setting up online payments or auto withdrawals or offering a discount for early payments.

4) Reduce Expenses

Learning how to deal with cash flow problems in small business also involves reducing expenses. It is easy to let your overhead costs get out of control if you aren’t paying attention. Look for anywhere you can lower costs without sacrificing quality, and cut out anything that isn’t completely necessary.

5) Get a Business Loan

A business loan is a great way to ensure you have plenty of cash flow during the early stages, or rough patches, of building a company. 

It can allow you to fully staff your operation, acquire enough supplies, produce enough product to sell, and so on. Having all of these things in place will enable you to grow and develop your company more effectively and efficiently for greater long-term success. 

Contact SunWise Capital

If expenses outweigh the money coming in, profits are inconsistent, or you just need a little more to support growth and development, you may want to consider a small business loan. 

SunWise Capital is a small business lender looking to help your business with its cash flow needs. We can assist you with growth, renovation, new technology or equipment, additional staffing, and much more when you apply for a small business loan. 

Contact SunWise Capital for more information or to get started today!

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