If you’re a business owner, you probably already know how important cash flow management is. Cash flow gaps are one of the main reasons some businesses fail. If a business lacks the funds to meet short-term needs, like gas or payroll, it’s more than likely going to be unsuccessful. Luckily, we have three tips to help you manage your cash flow and reduce the number of gaps that your business suffers from.
1) Be Proactive
One of the ways your company can better manage cash flow is by being proactive. The time to look for financing is not when your business is struggling; instead, start looking well before it happens. Some of your options for financing include getting a bank line of credit, taking out a loan, or working with a factoring company. Whatever you choose, the choice should be made before your company is in distress.
Another way to be proactive is to stay aware of changes in your industry. This holds true for small and large business. To grow a successful business, you need to know your products and understand your industry. Any changes in development or technology could potentially affect your company’s cash flow. Staying “in the know” can help keep your business afloat.
2) Considering Other Options
When most business owners find that they’re in need of cash, they go directly to the bank for a loan. The last thing you need when your business is experiencing a cash flow gap is to wait on a bank to approve your loan. You may have to consider looking outside of the bank for access to immediate cash.
Considering a factoring company may be an option that works for you. If you experiencing a cash flow gap because of unpaid invoices from clients, working with a factoring company may be the way to go.
3) Building a Cash Reserve
A great cash flow management strategy is to create a cash reserve. A cash reserve could allow your business to still run even during cash flow gaps. Most people create cash reserves by networking with investors that can help fill the cash flow gap. The hard thing about this strategy is finding these investors. You may not be able to find just one that can fill the gap with an investment, so it’s best to build a network of many investors. Another difficulty that you may find with this strategy is finding investors that will constantly invest. If you have a seasonal business that experiences cash flow gaps a few times a year, you’ll need a few investments.
An Extra Tip
Corporate Billing understands the struggle of experiencing a cash flow gap. Your company survives because of its cash flow; we want to help you manage it. Contact us today to learn how you can manage your cash flow through factoring.