All entrepreneurs are scared about running out of their money. Also, cash flow is a common problem for them. It is a risk of the absence of waiting for a paycheck. In our article, we try to avoid this fear from you. One of the solutions is to have funds for staying in business and pay attention to cash flow to maintain it for your business.
What is cash flow?
Everybody knows that cash flow is the calculation of all incomes you have. And it is very important for small businesses. As an owner, you have to deal with business accounting and keep an eye on incomes. In other ways, you can realize that you don’t have money to continue running your business.
There are some common cash flow problems:
1. Delayed payments
It is a common problem for B2B challenges. According to statistics, 60% of invoices are delayed. It can be a serious problem which doesn’t allow you to finish the work. What’s more, it is 30% payments canceled. The owners of small businesses have to wait for 72 days to pay their invoices. One of the solutions is to spread payment but it also takes a long time.
The way to solve this is to use a platform that provides a variety of payments.
You receive money but you might not have access to this payment. It is a common problem when you don’t have access to your account. It is an annoying and unavoidable bank problem. But you can avoid this using PSP and online invoicing.
2. You don’t have a cash buffer
A cash buffer is one of the ways to keep your business safe. It helps to keep the balance of cash incomes and outflows. It will be rather comfortable for you to calculate it yourself, schedule dates of payments to your vendors and from your clients, monitor cash flow.
3. Disorganized business process
The reason for business failure is disorganization. Statistics show that about 40% of entrepreneurs have problems with numbers. But if you can’t track budget, plan, and forecast you will be in a dark time in your business. The solution is to make a statement and try to predict surges and declines, organize your cash flow, to use tools to automate the process and minimize risks.
4. Quick growth
On the one hand, you are lucky if your business grows rapidly, but, on the other way, you have to face some problems connected with cash flow. Making more money causes spending more money while running a business. Growth needs upgrading, implement a tech stack, new business goals, generation of forms of passive income, founding new ways of a growing business, hiring new people.
5. Variety of payment terms.
When your incomes and outgoing cash don’t match up it can cause shortages. If you are a marketing business owner you need one account for clients to simplify and synchronize the process of getting money.
If you want to be a successful entrepreneur you need to follow these recommendations, realize your effective way to the business of your dream.