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Finance is the lifeline of your business; therefore cash flow must be steady and unhindered by bad debt. The purpose of cash flow is to give your business access to money when it is needed – which is crucial to future development and day-to-day running. If your business is struggling because money is either tied up in stock or invoices, consider implementing the following measures:
Many businesses struggle due to bad debt in the form of unpaid invoices. Credit control is crucial to business cash flow and the overall strategy of your business. For tips on how to get paid on time, visit How to Avoid Business Insolvency.
If customers know when to expect your invoice, you will greatly improve your chances of being paid on time and help put an end to those business cash flow problems.
It is tempting for any business to overtrade and accept more work than resources or cash flow permit. Failure to carry out the work undertaken can seriously damage your business’ reputation - always consider the long-term goals over short-term gains.
Nothing ties up your cash like surplus stock. Regularly managing your inventory keeps money flowing into the heart of your business.
Suppliers are usually keen to avoid losing a customer to insolvency, therefore try renegotiating contract terms and prices. If you don’t ask you won’t get!
You may consider factoring unpaid invoices to a third party. For factoring advantages and how it works, click here.
This is last on the list and for good reason. Approaching your bank for an overdraft extension or business loan can sound the kind of alarm bells that make banks nervous. Based on your banking history, contemplate your bank’s reaction before making an appointment at your branch.
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