Great cash flow management = a healthy business that has the opportunity to grow. This is perhaps the simplest equation in the business world but also one of the hardest to achieve. Cash flow has a habit of getting squeezed and stuck at the most inconvenient of times – often when you just didn’t see it coming. However, unexpected cash flow issues don’t always have to be the end of the world. There are some smart ways to handle them to ensure they don’t impact the business in the long-term.
The importance of monitoring your cash flow
Although there are some unexpected cash flow issues that will always catch you completely by surprise, others you can see coming. Monitoring your cash flow should mean that there are fewer unexpected cash flow issues and that you do at least have some warning when there is one on the horizon. But what if you’re right in the middle of a cash flow crisis – and you just aren’t prepared?
Smart ways to handle sudden and unexpected cash flow issues
- Start collecting on your debts. You, like many other businesses in the UK, might often suffer from the late payments epidemic that regularly puts enterprises into cash flow crisis. If you find yourself suddenly without any liquidity then start chasing up debts, hard. The likelihood is that even getting a small percentage of what’s owed to you will help bring you back from the brink.
- Borrow. Sometimes when your back is against the wall there is no other option but to look for debt or credit. Unexpected cash flow issues might be simply solved with a small loan or an extension of credit to get you past a bump in the road.
- Sell off assets. If you get to a stage where you urgently need cash fast and you don’t have many options, evaluate which of your (non-essential) business assets might be able to help you raise it. From stock through to hardware, you might not get full price for what you sell but it could create enough cash to get you through a really tough spot.
4. Boost sales or cut your costs. A marketing drive to increase sales can have an instant impact on cash flow and can be cheaply achieved with something like social media. You can also create space in your finances to deal with a cash flow squeeze by seeking better terms from your existing suppliers and partners. If you find yourself in real trouble with cash flow then, once you’re on the other side of the crisis, it’s often worth identifying ways that you could cut costs to reduce the chances of it happening again in future.