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How to Tackle the Cash Flow Bottleneck?

Baskar Sundaram
Baskar Sundaram
how to tackle the cash flow bottleneck?

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Cash flow problems can eventually lead to the death of a business. Especially in a bad economy it can quickly descend into a bad condition.

Here are some ways to quickly to solve cash flow problems:

Identify and eliminate unnecessary expenses

Look through your recurring monthly expenses and identify those services which you no longer use. Monthly business tool subscription and software subscriptions can add up and increase the expenditure. Identify those subscriptions and services which are not being used anymore. Another way to reduce expenses is to replace expensive services with cheaper alternatives. With proper research you will be able to identify affordable services.

Collect on invoices faster

Collecting your payment is the fastest way to get quick cash. Offer incentives to customers who pay the full amount upfront or within a short period of time. The earlier you get paid, the better your cash flow will be. Another way to improve the situation is to pay your bills slower. By delaying the payment you will have more cash on hand. You can also pay using a credit card which will give you some more leeway before the final payment.

Outsource tasks that do not provide monetary gain

Focusing on activities that do not directly contribute to the revenue of your business will indirectly affect your cash flow problem. It is important to use your full energy and time on those tasks which will ultimately increase the company profit. Outsource the menial tasks to a reliable freelancer. Use a Virtual Assistant or the services of specialised companies to do the mundane and tedious tasks. Concentrate on doing things that maximize the monetary value of your skill set.

Always save

Once the cash starts to flow in its important to remember that changing economic conditions and business environment might drastically affect your business. Creating a reserve and saving some cash will help you in the needed hour. A good month of business does not ensure a smooth sail forever. Past performance is no guarantee of future earnings. Buying unnecessary products or investing in frivolous needs might radically affect your business in the future.

Keep track of the numbers

In both good and bad times it’s vital to keep track of the cash flow numbers. Learn to calculate Current Ratio and Days Receivables Outstanding. These ratios and metrics will help you predict when things are going to go downhill. It will act as a forewarning and even help you to prepare for such a situation.

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