In small companies, small mistakes can spell disaster. That means a cash flow crises can cause a lot of damage in a short space of time for the typical SME. To avoid this, check out the following advice. Advice that will keep the finances flowing even when you are in tough spot.
Update your processes
To ensure a positive cash flow, you must update your system and processes. This means swapping from a traditional manual invoice system to an automated electronic one . As not only does this make the whole process easier to track and stay on top of, but you can send out payment reminders without it costing you a lot of time and effort.
This is something that will enable you to get paid a lot closer to the date outlined in your terms. It’s all about creating urgency in the payee, and sending regular reminders will do this. As they say: “It’s the ones that shout the loudest that get the attention.” So being able to do this quickly and easily will push your debtors to sort your outstanding debt first.
Have access to flexible funds
Another strategy that can help you prevent a cash flow crisis in you SME is to ensure access to a line of flexible funding whenever you need it. Some companies use business credit cards for this purpose, but the problem with these is that they can be difficult to gain access to cash with or to pay large bills because of the additional fees involved. So before you mistakenly believe that this is the best small business line of credit available, do a little research. As by using alternatives such as revolving credit you can ensure that your cash flow stays moving, without having to deal with the problems a credit card can cause.
Other companies look first to a business loan to provide funding to keep their cash flow active. Although, the main issue with these is that they have to be pre-arranged for them to be effective in an emergency. Something that can end up costing your business lots of money if you don’t end up actually needing it, or using all of the money that you have borrowed. Making an alternative line of credit, still the most beneficial option.
Recruit professional help
Lastly, with 41% of SME’s having cash flow issues, it certainly can’t help to get some professional help when it comes to managing your finances. This may be in the form of specialized tracking software that allows you to see exactly where your company’s incident and outgoing are at, at any one time.
Alternatively, you may feel better trusting your finances to someone specializes in the field such as for an accountant or a business finance advisor. As they can help you keep track of your cash flow and predict and avoid possible problems both within your business as with the market in general. As well as advise on the best course of action if the worst does occur.
Hernaldo Turrillo is a writer and author specialised in innovation, AI, DLT, SMEs, trading, investing and new trends in technology and business. He has been working for ztudium group since 2017. He is the editor of openbusinesscouncil.org, tradersdna.com, hedgethink.com, and writes regularly for intelligenthq.com, socialmediacouncil.eu. Hernaldo was born in Spain and finally settled in London, United Kingdom, after a few years of personal growth. Hernaldo finished his Journalism bachelor degree in the University of Seville, Spain, and began working as reporter in the newspaper, Europa Sur, writing about Politics and Society. He also worked as community manager and marketing advisor in Los Barrios, Spain. Innovation, technology, politics and economy are his main interests, with special focus on new trends and ethical projects. He enjoys finding himself getting lost in words, explaining what he understands from the world and helping others. Besides a journalist, he is also a thinker and proactive in digital transformation strategies. Knowledge and ideas have no limits.