Most people know that around fifty five per cent of start-ups fail within the first five years. Of those that do survive, thirty five per cent cite cash flow problems and late payments as key barriers to growth.
Cash flow is the blood that flows through the veins of your business. It’s essential, and without it, your business will topple and eventually fall.
Managing your cash flow should be one of your main priorities. Sounds obvious, right? Then why is it that one in ten businesses are failing to accurately forecast their cash flow, or are neglecting this area of their business altogether?
Let’s look at some of the most common cash flow killers and some smart advice for overcoming these pitfalls.
Cash Flow Killer: Paying everyone at once
It can be tempting to pay every bill as soon as it comes in. That way you don’t have to worry about forgetting to pay and you also don’t have the bill looming over your head.
This is a bad move. Paying your suppliers, without following some kind of strategy, could potentially end in chaos. You may end up not having enough money in the bank to pay other suppliers, causing cheques to bounce and sour relationships to form.
Cash Flow Saviour: Set up a payment schedule
Make a note of payment deadlines and stagger your payments accordingly. You can easily do this in an electronic calendar or via an app. This is a clever way to manage your finances, as you should not be paying suppliers if it leaves you in the red.
Remember, many suppliers will offer flexible financing, as long as you arrange this before there are any missed payments. Take advantage of these, and avoid late payment charges.
Cash Flow Killer: Unreliable clients
What’s potentially worse than you missing a payment? Yes, one of your own clients missing a bill due date. Sacré bleu!
Over seventy per cent of small businesses have had to deal with clients paying their invoices late. Two thirds of these even had to write the invoice off altogether!
Read more at…
