Want a steady income stream? The ability to generate a positive cash flow is essential for a business to remain viable in the long term but it is often easier said than done. Keep in mind that it is impossible to successfully grow a business unless it is both profitable and is generating a surplus cash flow on a sustainable basis. Without these two elements a business cannot thrive or grow and therefore the future of the business is limited. Take a read below as we explore the 6 major reasons why businesses suffer from poor cash flow…
You Don’t Make Enough Money
If that’s the case then consider charging more. Don’t be modest, most of the time you’re better at your job than you think and if you have poor cash flow, this means you are potentially undercharging your clients.
You Forget To Bill People
If we had a penny for every time we heard a client say they forgot to bill someone (or that they were slow to bill their customer, so the customer was slow to pay), well, we’d be very wealthy. Consistency with billing and following up with your clients will ensure a steadier cash flow and consistent revenue for your business. In simple terms … don’t forget to charge. You expect to be paid and your clients expect to be billed.
You Let Clients Get Away With Not Paying
If this is you, you need to put the foot down. This could mean serious trouble for your business in the long term. Collecting payments, ensuring strong, clear terms and conditions, and also collecting money is essential if you want your business to grow and thrive. Be organised, consistent and ambitious with your business.
You Don’t Look At The Cost Of Running Your Business
Unnecessary high-end expenses, overlooked staffing on quieter periods, not keeping track of billing or being unable to identify where costs are being drained are all rookie errors for a business owner. We cannot stress enough how important it is to keep on top of your finances, remain aware of the costs of running your business and be able to identify where high-end purchases and business expenses were used unnecessarily.
You Have A Business That Is Growing Dramatically
That’s great. However, if your cash flow isn’t consistent then you have an issue that can’t be ignored. We recommend using invoice financing which can ensure a steady stream of income. Invoice financing allows businesses to borrow money based on amounts due from clients. This can assist your business to improve its cash flow and reinvest in operations and development at an earlier time, than if you had to wait until all your invoices were paid. Don’t be afraid to make these changes, your business is growing and therefore you need to make alterations to fit it.
You Had A Downturn Without Responding To It
Everything that goes up must come down, but don’t just stand there like a stunned mullet – the trick is to react and adjust. Of course every business will have downturns but what will keep your head above water is how you adjust to this period; react to overheads, create a new marketing campaign, make some process improvements. When there is change you need to change with it or you and your business will get left behind.