Financial and Non-Financial Solutions to Fix Cash Flow Problems

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FINANCIAL AND NON-FINANCIAL SOLUTION TO FIX
CASH FLOW PROBLEMS
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Cash flow problems are the number one reason for
small business failure. A cash flow problem
arises when a small business struggles to pay its
obligations as they become due. Most small
business owners confront a cash flow problem at
one time or another. Luckily, cash flow problems
can be avoided with groundwork and the right
strategy. You can also use a mix of financial and
non-financial solutions to fix cash flow
problems. In this article, well explain how to
solve the most common cash flow problems with
financial and non-financial solutions.
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Financial Cash Flow Solutions
Using financing is the quickest way to fix
immediate cash flow problems. Here are a few
financing options to help you get started
Short-Term Loans
Lines of Credit
Invoice Factoring
Inventory Financing
Refinancing Consolidation
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Short-Term Loans
Getting a short-term business loan is easy with
funding in just 24 hours is a great way to tackle
cash flow issues. The short-term loans have
higher interest rates (APRs), but the total cost
can be marked down than long-term loans with a
lower APR. With Merchant Advisors, you can
quickly qualify for short-term business loans
with a personal credit score of 600, with 12
months of time in business, and at least 100K in
annual revenue.
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Lines of Credit
The second most suitable financing option to help
solve cash flow problems is securing a business
line of credit. It works similar to a credit card
where you only pay interest on what you used, not
on the total credit line extended to you. The
best thing about a line of credit is that when
you pay down your balance, the amount of credit
becomes available to you again. Merchant
Advisors offers flexible business lines of credit
with payment in 6 months of your last draw. The
qualification requirements include 600 credit
score, 12 months of time in business, and 100K
in annual revenue.
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Invoice Factoring
Invoice factoring is another way to secure money
on your unpaid invoices from customers. In
Invoice factoring, you typically pay a small fee
to access revenue youre going to receive from
your own customers, rather waiting for months.
Inventory Financing
You can use inventory financing to finance
inventory purchases and is best suited to prepare
yourself for a busy season or to fulfill an order.
Refinancing Consolidation
Refinancing a small business loan or
consolidating your debts into a single monthly
payment can help save you money and manage cash
flow problems.
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Non-Financial Cash Flow Solutions
If youre unable to secure a working capital loan
or dont want to take up more debt, you can also
use non-financial cash flow solutions to solve
cash flow problems.
Re-negotiate contracts with Supplier
Improve Invoicing Process
Incentivize Customers to Pay Quickly
Prepare for Auto Billing
Accept Online Payments
Delay Payables a Bit
Reschedule Payments
Amend Payment Contract
Lower Your Overheads
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Re-negotiate contracts with Supplier
Renegotiating with suppliers can help if youre
persistently struggling to keep going and to
increase your disposable cash. Before you
approach the suppliers to renegotiate your terms,
make sure you formulate a plan. You may only get
one shot at this to improve your cash flow
without dinging your credit.
Improve Invoicing Process
Another way is to improve your invoicing process
to invoice your clients. This can help lower
invoicing cost and errors, gives you data on
invoicing payments, makes it easier to collect
overdue invoices and get invoices to your clients
faster. You can also use accounting Softwares
such as Quickbooks to track your accounting as
well as invoices. Here is a few best accounting
software to choose from for your small business.
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Incentivize Customers to Pay Quickly
If youre struggling with cash flow problems, get
creative and figure out ways to incentivize your
customers to pay faster. Providing a method or a
reason to pay you faster can help improve your
immediate cash flow.
Prepare for Auto Billing
If you havent set up auto-billing for your
clients, then its time to prepare for it so you
can know when the cash will be in your hand.
Setting up auto-billing for an auto-billing cycle
will help you know exactly when you can have the
cash, so you plan to spend accordingly.
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Accept Online Payments
Accepting online payments is easier and
convenient for customers. If you provide them an
opportunity to pay you online, they may be more
willing to make the payment immediately upon
receiving the invoice. Remember, accepting
payments online include transaction charges as
well. Its up to you whether to pay those charges
yourself or pass those along to your customers.
Delay Payables a Bit
Stretching out your payables can help with
short-term working capital, but in the long run,
it can hurt your relationships with trade
partners as well as your credit. There are
various ways to delay your payables while
preserving vital vendor relationships.
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Reschedule Payments
Rescheduling payments of a month can also help
solve the cash flow problem. If there are
numerous payments due at a particular date of a
month, consider negotiating a different due date
with some of your trade partners.
Amend Payment Contract
Most contracts have payments due at the end of
the month, but some providers allow semi-annual
or annual payment terms. The benefit of these
terms is that you dont have ongoing monthly
payments to make helping you reserve money for
cash flow.
Amend Payment Contract
Lowering overhead costs can also help solve a
cash flow problem. Keep in mind that, while
reducing your expenses make sure you take
measures to maximize your cash flow without
hurting your business operations while minimizing
the time it takes to receive the money. Look for
cheaper options for your utility services such as
phones and the internet. Getting new service
providers with more affordable rates on these
services can help save money too.
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The Bottom Line
You will find many ways to solve your cash flow
problems. Each cash flow solution can help you
with your overall cash flow management, allowing
you to foresee exactly how much cash youll have
on hand at any given time.
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