IF you find that you’re falling into financial issues and cash flow problems, you’re not alone. This is common for many growing businesses.
Thankfully, due to the incredibly common nature of cash flow management issues, it is easy to learn from other businesses mistakes. These are 3 major obstacles and solutions that pinpoints common cashflow problems and how to overcome them.
Obstacle: Your overheads are the expenses that are related to your day-to-day running of a business. This does not include anything directly related to selling a product, but things like rent and utilities. Having high overheads is a recipe for disaster, as it gouges any profits from your business.
Solution: The best way to rectify high overheads is to simply cut back. Audit all of your overhead expenses and look for where you can do without. Although painstaking, it is an effective way to handle your cash flow management.
Obstacle: The allure of capital can make you overlook payment terms at times. Unfortunately, this can cause your cash flow to suffer tremendously. If your accounts cannot wait the 60 days for the invoices to pay off, then you are in a host of trouble.
Solution: Dealing with slow invoices involves tailoring the payment terms to your favour a little. Offer an incentive (such as a discount) to your customers that pay early. This cash incentive can motivate most businesses to pay early, and helps your cash flow out. Alternatively, you can use invoice factoring to finance your invoices.
- Bad debt
Obstacle: Dealing with customers that don’t pay proactively is more than a nuisance, it can completely ruin your cash flow management and cause other collateral damage.
Solution: To safeguard against bad debt, you need a little due diligence on your part before you enter into any business relationship. Make sure they have the capital and assets to pay you off, and tailor the payment terms accordingly.
Ultimately, knowing the challenges and obstacles that are holding back your business success comes down to understanding the elements that form them. From overheads through to managing bad debt—all aspects are critical to the whole process.
At the end of the day, you should control your business, not let it control you. If you’re stuck, overworked, and feel that there isn’t enough time to make the money you want and do the things you like, let us guide you through our proven system to make you a Master of your priorities and not a slave to time. Click here for your FREE strategy call now. Limited bookings available.
Rob Kropp – The Profit Coach
About the 4It System for your business and life: The Make It, Manage It, Keep It, Grow It™ (4-It System) will help you structure your business in a way to make leveraged profit. Manage excess earnings so you can scale effectively. Keep more money in your top pocket. Then grow it, so you can play a much BIGGER game than just the business. Your wealth will expand as your financial freedom turns from a dream into a reality through building a business, living a life and leaving a legacy.
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