Many companies experience trouble when trying to make their finances break even every month, so if your business is struggling, you’re not alone.
Any business that is struggling to pay wages will need to find a remedy as soon as possible, as unhappy employees will result in a massive drop in productivity. Poor cash flow will need to be assessed, as there may be areas that can be adjusted or modified to free up much needed capital, just when you need it.
Some of the most common areas where cash flow can be improved include:
- Credit Control.
Ensuring that your credit control department is chasing any outstanding money will often provide a boost to your financial situation. It’s also important that you run credit checks on your customers, particularly if you have an inefficient debt collection strategy. Managing late payments and getting paid on time are key factors in keeping your business finances stable and in positive figures.
- Meeting Delivery Dates
Failing to fulfil orders on time or to the required specification can leave customers reluctant to pay. It can be effective to implement a system which will monitor your production efficiency, plus a stock quantity and quality control system.
If sales have slumped, you may need to reassess your marketing plan.
- Inefficient Ordering.
It’s important that your customers experience an easy and simple-to-use ordering process. Make sure that customers can place orders by email, telephone and internet. Ensure that your order forms are clear and straightforward.
Make sure that your accounting system is fully up to date and keeping track of key accounting ratios. This will help to alert you of any forthcoming cash flow crisis and allow you to only take on orders that your company can financially cope with.
- Supplier Management.
Try to reassess your supplier management system, as you may discover that you’re being overcharged for items that could be delivered more quickly.
- Profits and Overheads.
Cost cutting can go a long way to keeping your business afloat during turbulent times. Could you outsource activities that aren’t core to your business? Review the utilities contracts to determine whether costs could be cut by switching supplier.
If you’ve looked into these areas and you’re still struggling to find the funds to pay wages, you may need to consider alternative ways of raising money. Short term loans may be all you need to get through a difficult period, but there could be more suitable options available to support your business.