If you are in a situation where you lack the cash to pay your bills, then this doesn’t means that you have failed as a businessperson. In fact you’re a normal entrepreneur who can’t perfectly predict your future. You are one among many others, across different sizes and sectors.
The key to managing cash shortfall is to become aware of the problem as early and as accurately as possible. There are normal, everyday business practices which can be applied to resolve this situation. Some of the ways by which we can help overcome your cash flow problems are:-
Preparing a cash flow projection is absolutely vital. It should be opened to check everyday’s status similar to how you open and check your e-mails. Even more important is updating it as and when you come to know about the certainity of amount of an item of inflow or outflow. Special attention should be paid to things like seasonal cash fluctuations based on historic data of previous years.
When doing sales forecast, it’s better to be cautious than optimistic because then you’ll avoid nasty surprises. Factors we consider for doing your sales forecast are the market knowledge, the level of pricing, the level of competition, the state of the economy, any special event going to occur, comparison of similar forecast vs actual numbers last year and so on.
If your cashflow is tight, we advice you to cut every expense which doesn’t contributes towards the growth of your business such as decoration, gifts for example some wall paintings may look nice but they won’t grow your business. Also find cheaper suppliers for regular expenses like utilities, I.T. and insurance. Any major expenditure on buying assets should also be avoided as it can result in significant cash payment as deposit.
You need to be very clear about the priority of payments going out every month/quarter. An expenditure or payment if can be deferred to some point in future, should be done so.
HMRC normally agrees to settle the debt owed to them in affordable instalments without charging much interest or without charging any interest at all. It is not in their interest if your business goes down without paying them.
The best source of funding the temporary cash shortfall is setting up overdraft facility with the bank. Other options are invoice discounting, small term loans. We can certainly help you with these options.
Don’t build lot of debt owed to you. If there is any customer who has not paid by his due date should be chased vigorously.
Ideally, tight cash flow situation should be no more than a traffic jam on motorway. It should only be a temporary phenomenon. If it continues for a long term, it casts a shadow on the profitability of the business. You cannot continue a business for long, if it is not profitable.
To find out, how we can support your business, why not contact us on 0208 914 8887 for a Free, No Obligation Consultation. Success of your business is our business.
(It takes less than 1 minute)