For businesses of all sizes, it is imperative to maintain a healthy cash flow. However, unexpected financial obligations, slow sales periods, and a lag in customer payments can create a major strain on cash flow which can be felt throughout every aspect of the company. Fortunately, there are a few things business owners can do to prevent cash flow issues.
Keep A Close Eye On Expenses
This one should go without saying, but reviewing business expenditures on a regular basis can turn up needless expenses. Maybe the office doesn’t need coffee and doughnuts every day, paid for with the company credit card. Perhaps there are vendors and shipping companies willing to give more competitive pricing. Some meetings can be attended remotely, instead of flying on-site. All of these expenses add up, and there are always expenses which can be cut to free up capital and streamline operations.
Demand Payment Upfront
It is not unusual for businesses to demand a deposit on large customer orders. Some even make the deposit a flat percentage of every final sale. The reason for this is that customers are more willing to pay off the balance once an order is completed, if they already have money invested. Some businesses will even state upfront that the order will be delivered upon receipt of the balance owed, rather than waiting 30 days or more on open invoices.
Take On Unusually Large Orders
This seems to fly in the face of reason, because large orders usually place a strain on cash flow and internal resources. However, with Purchase Order Financing, businesses can take on large orders and enjoy the boost in revenue. Purchase Order Financing acts like an advance in working capital to cover the cost of filling unusually large customer orders. Once the order is filled, and the customer pays, the financing is deducted and the remainder is delivered as revenue. This is a great way to boost cash flow and accumulate growth capital.
Factoring Open Invoices
If there is already a strain on cash flow, and financial obligations need to be met, factoring invoices is a great solution. Instead of waiting 30 days or longer to receive payment on invoices, factoring services will convert them to working capital within 24 hours. Factoring can help clear up a backlog of open invoices without using collection services, which can further delay payments. Invoices of all sizes and quantity can be converted with factoring to get your business the working capital it needs.
If you are experiencing cash flow issues, and would like an affordable solution, reach out to Eagle Business Credit by clicking the “Contact Us” tab at the top of this page.