Putting in place a long-term strategy of any kind may be the last thing on your mind as another statement of account marked ‘overdue’ appears on your desk and your heart sinks as you recognise the number appearing on the phone that has just started ringing (it’s Bob, who you promised would be paid last week, calling to find out why he still hasn’t received any money).
Struggling with crippling cash flow problems, it is more likely that you will be focussed on the immediate problems you are facing, such as how you are going to afford to pay your wages bill at the end of the month, or how to address the demand for payment that you have just received from the taxman.
How to deal with immediate cash flow problems
There are a number of possible solutions to dealing with those short-term problems, but once those problems have been resolved, it is important to ensure that you have a strategy in place to ensure that the same issues don’t happen again. Let’s look firstly at dealing with your immediate problems.
To address the short-term cash flow problems, Cashsolv has a number of options available to help. If your problems have arisen due to HMRC debt, we can assist you in agreeing a time to pay scheme with HMRC. If you are having issues with late paying debtors, our commercial debt recovery solution may be required to help you convert your debtors to usable cash.
Perhaps you are suffering from a late payment or an unexpectedly cancelled contract, resulting in you being unable to service your own liabilities and in need of cash quickly. Obtaining a loan from your bank may take too long to be able to address your problem quickly enough and an emergency business loan from Cashsolv may be a suitable solution. Whatever the nature of the cash flow problems a business is experiencing, Cashsolv has a range of solutions available to deal with them and help a business get back on the right track.
How to ensure cash flow problems are not long term
So, you’ve addressed the cash flow problems that you were suffering, you are back to paying your bills on time and you have more time to focus on making your business successful without the stress and distraction of cash flow problems. Now is the time to be looking at what you can do in the long-term to keep your business that way.
Here are a few tips to help give you a long-term solution to your cash flow problems:
- Have a cash flow forecast. You need to have a good idea of when money is going to be available and when expenses will need to be met. Setting long-term projections will help you to focus on planning where you want to be in six months’ or twelve months’ time.
- Use it! Once you have your forecast, you need to compare it to your actual cash flow. Deviations from your expected outcome will help you to identify if you have a problem sooner and give you time to deal with it before it becomes serious.
- Get paid quickly. Once you’ve completed the work, you need to get paid for it. Make sure you are invoicing quickly and ensure that you have suitable controls in place to ensure that any unpaid invoices are chased as soon as they become overdue.
- Make sure your customers know when they are supposed to pay. Agree payment terms with your customers before you begin work and state them again on your invoice.
- Consider debtor finance. Explore whether invoice finance with invoice discounting or factoring might be an option for your business.
- Plan ahead. If you are considering expanding, taking on a new project or investing in a new piece of machinery, think about how that will be funded. Will you be risking your existing cash flow if you try to fund your plans from existing working capital? Consider whether it would be better to fund them using business finance with a loan, invoice finance or overdraft facility.