[This article was written by Anita Ginsburg.]
Running a business is just about the most difficult project you can take on. A common problem many business owners face is that they think they should be doing well based on the amount of business they have coming in. However, at the end of the month, they still find themselves in the red. There can be many reasons why this is the case. One of the most common explanations is that the business may have cash flow problems. With that in mind, here are some strategies for getting cash flow issues under control so you can make a profit again.
Create a Cash Flow Forecast
One way to truly get a handle on cash flow problems is to create a cash flow forecast for your business. This forecast should predict the amount of cash you expect to take in versus the amount of cash expected to be paid for various expenses over a specific period. Make the forecast for a 30 day period and use this information to help create a cash flow budget. This should give you a firmer handle on exactly where your money is going.
Get Overhead Expenses Under Control
One of the most common sources of cash flow problems is high overhead expense. Each item may seem insignificant on its own, but all that overhead accounted for together can certainly drain your revenues. Examine each individual expense and see where you can make cuts. Slashing overhead is one good way to help ensure the long term viability of your company.
Get Outside Help
In certain cases, getting your cash flow problems back under control may seem impossible. This can cause a crisis when the possibility of going out of business may not be that far off. In that case, it may be best to get professional help and acquire cash flow protection services. Companies like Bento for Business can give you access to a digital platform that allows you to see all your spending and control all your expenses in real time. This can help you get your financial house in order again before it’s too late.
Examine How You Collect Receivables
Another possible source of cash flow problems could be customers who are too slow to pay you. You may have made the adequate number of sales, but you will not have the right amount of cash when you need it if that’s the case. Examine your receivables processes and make improvements where needed. You may also need to be more careful about what customers you lend credit to.
Serious cash flow problems can certainly kill a business over time. If the numbers aren’t adding up for you, examine your books and institute changes like the ones suggested above. Doing so can put your finances in the black again and help to save your business for the long term.
Anita is a freelance writer from Denver, CO. She studied at Colorado State University, and now writes articles about health, business, family and finance. A mother of two, she enjoys traveling with her family whenever she isn’t writing. You can follow her on Twitter @anitaginsburg.