It’s fairly well known that persistent problems with cash flow are one of the main reasons that startups ultimately fail. With very little credit history to recommend them for loans, there simply aren’t many avenues open for securing capital as a relatively new small business. Alternative lenders have begun to fill in this critical gap with financing products that can help, but in order to ensure long-term success, the best approach for a new business owner is to learn how to manage cash flow well. Here are a few tips which can help you do that.
Maintain a reserve
Don’t think in terms of ‘if I have a shortfall’, but instead you should be thinking of ‘when I have a shortfall’. It’s going to happen. And it’s going to happen more than once. You can’t conduct business in the hope that your well never runs dry, so you should be setting aside money whenever possible. That will leave you with a reserve that will help you get over the bumps in the road.
Unless you’re an expert accountant yourself, it is definitely worth your while to hire someone who is. That will help to ensure that your finances are being managed in the most advantageous manner possible, and that you aren’t wasting resources which could be vital to your survival.
Collect receivables promptly
Yes, it’s easier said than done, but there are some things you can do to keep payments on track. For instance, invoice immediately after a sale rather than waiting for an upcoming billing cycle. Don’t extend net terms longer than 15 days, so you aren’t kept waiting for payments. Offer discounts to customers who pay more quickly. Do everything you can to encourage prompt payments, so you don’t develop cash flow problems.
Don’t hire employees unless you really need to, and when you do hire, make sure that your newhires are individuals who can bring real value to the company. If you can find an intelligent, motivated worker, he/she could be worth two or three less talented prospects.
Take advantage of technology
Store data securely on the cloud, because then you won’t need to be so concerned about having to pay for extensive security measures yourself. You’ll also be able to access your business data from anywhere, using any kind of device. Your business can be more flexible, and you can be a lot more productive – which translates to better cash management.
For more cash flow management tips and solutions, contact SkyBridge Capital today!