Finding ways to improve your business’ cash flow, and increasing your finances without having to take on loans can be difficult. However, there are options available to improve your cash flow, allowing your business to operate with more room to breathe.
Invoice Immediately: Ensuring that all invoices are processed and sent out as soon as possible will allow for a steadier cash flow and more beneficial financial position for your company. Regular and well structured payments should be arranged with any long term contracts that your business has.
Don’t Overtrade: Overtrading can be a problem for your business if you try to fulfil orders without having the funds or resources to do so.
Recover Debt: Ensure your credit control department is recovering all outstanding debts, which can really help to improve cash flow. Thousands of businesses struggle to break even because their credit control system is flawed or slack when recovering debt.
Reassess Your Inventory: Keeping a tight control on stock levels will benefit your finances. Any unnecessary stock held by your company is just tied up funds, waiting to be unleashed.
Negotiate Credit Limits: Renegotiating credit limits with your main suppliers can afford you more time with your cash. If this could be arranged with several suppliers, you may find your operating finances improve significantly.
Factoring: Factoring, also known as debt factoring, can allow you to sell your outstanding invoices to a third party, called a ‘factor’. They can provide your company with finance, debt collection and ledger management services all through factoring.
Sell Unnecessary Assets: By selling some assets that your business under uses, you can lease them back if you need them. This can help to free up finance, as long as you take into account the true value of the assets and assess whether it would be financially viable.
Speaking With the Bank: If the options above have been tried or aren’t suitable for your business, you may wish to speak with your bank about extending your finance. However, this can be a risky choice, as the last thing you want to do is worry your bank about your company’s financial position, as they may choose to call in any overdraft. There are no guarantees that your bank will grant your request, so you may benefit from seeking a financial intermediary service.
This may boost your chances of being granted approval from your bank, as possible pitfalls in your application can be ironed out, setting your business up to be in the best possible position.