1 in 2 businesses reported issues with cash flow in 2018. Poor cash flow is a major cause of concern for SMEs, and many in the sector have gone under because of this. While financial assistance is widely available for businesses facing this challenge, it doesn’t necessarily prevent its recurrence. This post discusses other things you can do to stay positive amidst a cash flow crisis.
- Expedite payables
Cash flow management is like breathing. There needs to be an inflow of oxygen, in other words, cash in this instance. Rather surprisingly, SMEs are not diligent in this accounting function until a cash flow crisis beckons or occurs. Here’s what you can do:
- Automate invoicing, for example, the 1st of every month or at the start of a project
- Offer payment options or plans
- Work on past accounts due quickly
- Structure a payment plan for your receivables
Reducing the load of your receivables can help. Either delay payment or make regular smaller payments. With the latter, when you can make a bigger payment occasionally, do so. What is important is you work towards knocking off your account receivables gradually and consistently. Stability is key in a cash flow crisis. So stick to the plan!
- Review your pricing strategy
A cash flow crunch presents the opportunity to review your pricing strategy. This encompasses a review of the costs of raw materials, production and marketing as well as sales. They can impact on your bottom-line. In addition, the process may help you identify your most profitable products or services too. To this end, you may have to adjust your business plan accordingly.
- Manage your expenses
As you grow the business, you may have accumulated some ‘financial fats’. These are expenses incurred that may have appeared rational in the effort to drive growth. Its time to slash it.
Staying optimistic amidst a crisis can make or break anything, including the business. Connect here to learn how we can help with your cash flow management.