How To Overcome Cashflow Problems?

Cashflow is an essential part of owning a business and having a healthy cash flow can allow businesses to solve problems quickly and make smart investments when the opportunities arise.

A healthy cashflow presents revenues exceeding costs and it’s a position that many businesses want to be in. If cashflow is weak, a business may struggle to seize growth opportunities and more likely be in a survival state of mind.

We’re going to explain how cash flow works, explain popular jargon that you will see floating around and share some tips on how to boost cash flow.

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What is Cashflow?

Cashflow is about juggling the amount of capital coming and going into your company. This is important for any business regardless of their size or industry as you will have bills, employees to pay, stock to purchase, travel costs, equipment and more.

To really understand cash flow, it’s important to view it as part of a cycle that inventory, cash and payables before it repeats itself each month.

Operational Cash Flow

SME Owners may do well to create a cash flow forecast that covers them for the next 8-12 weeks. This short term type of financial management can help ensure the business is well equipped to meet its costs.

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Strategic Cash Flow

A short term view of cash flow isn’t the only important view a business owner should consider. Instead, cover all bases by also developing a strategic cash flow plan. This should span over 6,12 or 18 months and should identify how much cash your business strategy will demand at each stage of its development.

You can include seasonality (e.g. Christmas, Black Friday as well as the season changing) , key events such as product launches and even plan for competitor activity (e.g. Amazon Prime Day) as part of this exercise.

How to overcome cash flow problems?

You won’t be the only business that will face cash flow challenges at some time in your business lifetime. However, there are some quicks tips on how they can be navigated:

  • Cutting back on expenses is a common quick fix as well whilst on the other side of the coin, adjusting prices to boost capital coming into the business can also be a viable option.
  • Start accepting payments via alternative channels such as through your website, card payments instead of just cash or establish a relationship with a commercial finance broker who can arrange finance solutions for your customers.
  • Review your repayment terms on your invoice and decide whether they should be shorter (90 days to maybe 30 days)
  • Review how frequently you send out your invoices. For example, send invoices out each month instead of every three months or every two weeks instead of once a month.
  • Review any outstanding invoices and chase up payments or if you have been waiting a long time for a payment, can an invoice finance facility help.

Ultimately, having a robust cash flow is a no brainer for SMEs as it helps business owners plan around factors such as seasonality. Additionally, another planning option that can help: ensure a business has the right access to cash is understanding external finance.

How can a finance facility improve cash flow?

Using a finance facility can strengthen your cashflow, it can guarantee access to funds that a business may need if its costs exceed its revenue.

Business Loans can help you manage cash flow problems if you need to injection of cash into your business as a bulk sum and many short term loans are repayable over the course of a couple of years.

Asset Finance is used when you’re acquiring large (hard) and small (soft) assets and instead of buying the machinery, equipment or commercial vehicles outright, you can acquire it on finance and pay affordable monthly payments.

Invoice Finance is used if you’re often finding yourself waiting for invoices to be paid, having the option to get the majority of the invoice paid up front could be a huge benefit if you’re stuck by a sudden cash flow problem.

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Having the right finance product in place can unlock strategic ways for you to start growing your business through your cash flow management. When applying for finance, your business credit score is very important as it plays a role in your business overall success when applying for finance. If you believe that you have a poor credit rating, there are a number of ways that you can improve your credit score.

How can Amplo Commercial Finance help you and your business?

As a commercial finance brokerage, we can arrange a full spectrum of finance solutions to suit your business’ needs. Whether it’s cashflow finance or asset finance to the purchase of new machinery for your business, we’re confident that we will be able to find you a finance solution.

If you would like to speak to our team about your finance requirements, don’t hesitate to get in touch for a no-obligation discussion. Call us on 01270 443510 or complete our contact form and we’ll back to you whenever is best for you.

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Amplo Group
11 Mallard Court, Mallard Way, 
Crewe, Cheshire, CW1 6ZQ

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