2. Promptly pay your invoice

One possible solution to allow your customers to pay their invoices within a 30-60 day grace period is to implement a strong collections process to prevent any potential delays. 

Failing to do so could result in a negative impact if clients consistently make late payments.

One option to consider is providing a discount for early settlement, such as 1-2%, if payment is made within 14 days. However, it is important to also consider the impact on your profits.

3. Request an extension from major lenders

While it is important to ensure timely payment and prevent outstanding invoices, it is not unusual to negotiate extended payment terms with major creditors.

This action should not be viewed as hypocritical opportunism, but rather as efficient management. 

The individuals to whom the debts are owed could potentially be utility companies willing to align payments with business revenue, or lenders who may be willing to provide a grace period for payments if the business operates seasonally.

4. Minimise costs

By compiling the monthly budget mentioned previously, one can easily pinpoint any unnecessary expenses that can be reduced or eliminated.

If your sales operation is struggling to sell its inventory, it may be wise to reconsider ordering more. 

It’s futile to try and defy market trends. If the response is unfavourable, it may be beneficial to sell some stock at a small loss and allocate those funds towards other areas of the business, in order to prevent the stock from losing value.

5. Raise your prices

A common concern among businesses is the potential loss of customers when raising prices. However, it may be beneficial to analyse the prices of competitors to determine if your rates are significantly lower.

The distinction lies in determining what is considered a good value for money versus what is actually within one’s budget. Additionally, considering the context is crucial.

If you manage a restaurant known for its exceptional fine dining or a highly acclaimed salon on a popular street, will your customers be deterred if you increase your prices by 10-15%?

6. Comprehend the concept of business credit cards

A  corporate credit card can offer a rapid influx of funds when necessary, with no obligation to utilise it. 

If you are uncertain about your chances of being approved for credit, consider using our commercial loan calculator below to determine the amount you can comfortably borrow before starting the application process.

7. Enhance your profit margin

Elevating prices doesn’t solely result in boosting your profit margins.

The overall profit that you keep is greatly impacted by the cost you incur at the source. If you make poor purchasing decisions, it can negatively affect your business. 

Therefore, it is important to search for the most competitive prices in your market and engage in negotiations with your suppliers and creditors. They have a vested interest in your success, so it is advisable to inquire about any assistance they can offer.

8. Get creative with your sales strategy

In order to prevent cash flow issues, it is important to anticipate and address slow periods before they occur. This can be achieved through effective sales strategies, such as providing a discount for the third visit before Easter if your restaurant experiences a decline in sales after the holiday season.

For retail stores, it is important to consider options for upselling and cross-selling. To boost sales through direct communication, it is necessary to brainstorm creative ideas. If a tight budget is a concern, there are various low-cost ways to utilise social media for marketing, as mentioned in this resource on low-cost social media ideas.

9. Make sure to maintain a proper stocking schedule for optimal health

For businesses that sell products, having excess inventory can negatively impact their cash flow.

Sales representatives are constantly trying to convince you to make more purchases, but it is important to consider the practicality of their enticing offers. It is not beneficial to have excess inventory sitting unused on shelves just because you were enticed by a good bargain.

One option to contemplate is investing in software for managing your inventory.

This tool has the capability to inform you about current top-selling items, display your sales trends, and propose an effective purchasing strategy – which can even include automated order placement. It can serve as a valuable resource in eliminating the emotional urge to overstock.

10. Reflect on electronic commerce

Walking away from stores that do not accept card payments and having to search for an ATM on the main street can be a frustrating experience.

It is also essential for your website to have a means of conducting transactions, even if it is not primarily an online selling platform.

An instance of this would be a salon business that does not require clients to pay for haircuts in advance through online means. Instead, they could offer gift vouchers and merchandise for sale. 

Similarly, a dining establishment could also offer food products for purchase, while an engineer could choose to charge for basic maintenance services.

Obtaining card processing is a simple process, as companies are enthusiastic about bringing eligible businesses on board. Upon approval, there is even the possibility to request a merchant cash advance.

11. Discover the Benefits of Working Capital Finance

It is important to familiarise yourself with various funding strategies that can aid in avoiding financial difficulties within your business. 

Working capital finance encompasses a vast array of choices, including overdrafts and short-term loans. Here are four illustrations:

Adaptable Business Overdrafts

In order to alleviate temporary financial difficulties, a business overdraft  is a predetermined sum of money that is typically attached as an option to a current bank account. 

The overdraft cap is available for use if required, and interest is only charged on the utilised amount.

There is no requirement for you to utilise the overdraft and there will be no charges if you choose not to use it. 

However, there may be an arrangement fee and the bank could withdraw it if your credit score changes or if it remains unused for a period of time.

Advances for Merchants

By obtaining a merchant cash advance from a lender, you will receive a set amount of money and repay it by giving a portion of your customers’ credit card transactions. 

Essentially, this means that you will receive an early payment for your future card sales from your card processor.

Financing Invoices

Using invoice financing, there is no need to wait for weeks for your invoices to be settled as lenders will promptly provide you with the majority of the amount. 

This allows for quicker payment for your services, freeing up your time to concentrate on managing your company.

Financing through assets

Asset-based lending is a method of increasing cash reserves, enhancing overall profits, and preventing cash flow issues by utilising business assets like accounts receivable, inventory, equipment, machinery, or real estate. 

The eligibility for this type of lending is determined by the value of the asset that is being used as collateral.

In order to address temporary cash flow problems, we have provided several practical suggestions that can be implemented. However, we understand that certain businesses may need extra financial support.