Is your company struggling to pay all its creditors their payments within due date?
Is your company experiencing mounting pressure for making regular payment?
If your answer to the above questions is ‘yes’, then there is every chance that your company must be looming under the risk of coming into insolvency. While company liquidation is under process then cash flow of the company will be the first casualty.
So, then what can you really do to turn around the cash flow of your company? Following are few tips that can help you under such situation.
1. Explore your various finance options
In such situation, you need to find any short-term finance, which can only be the fastest way to get a right solution. Most business relies upon credit cards and overdrafts when any business goes in such situation.
However, if you have reached already to your maximum limit then it is time to explore alternative finance options.
2. Negotiate with all your creditors
When you are struggling for making payments on time, then most companies try to avoid making any contact with the creditors. However, such approach can only make the matter worse.
As most of your creditors can be a small or medium-sized company, if you negotiate with them then they will understand about your cash flow pressures.
3. Accelerate your receivables
You can accelerate your own receivables in the following few ways:
- Ask customers to make partial-payment upfront
Ask for partial upfront payment to boost cashflow
- Send out all invoices more quickly
Instead of sending invoice under regular process, send invoice immediately after the service.
- Improve collections process
Do enough follow up for getting collections in time.
- Offer discounts for early payment
This can motivate them to pay early.
4. Sell all non-essential assets
You can also try to do this strategy but in that case, you will be able to apply this step once or twice only, so it is not something that you must rely too much in such condition when you are going through cash flow problem.
5. Reduce your expenses
Few dramatic measures for cost-cutting may potentially do much more harm than really any good and also it can damage the morale of your employee too and also alarm your customers.
However, this is also a way that can help you to reduce your unnecessary expenses by doing few minor tweaks.
6. Increase your revenue
By running flash sale can be simple way of increasing your revenue and also can help you to go through rough patch. However, such strategy can be most suitable for those companies who sell physical products with healthily profit margins.
Also, if have excess stock, then flash sale can be very effective way of improving your cash flow and turn your stock into cash.
7. Explore various options for business rescue
During cash flow problem, if all the above does not work then chances are that your business must be insolvent. Any insolvent businesses are those who cannot pay bills on due date.
Seek advice from a professional.