It’s important that you have a steady flow of cash coming in so that you can pay for expenses and make a steady return. Cash flow problems can occur for all kinds of reasons. If you’ve noticed cash flow issues, consider if any of these causes could be to blame.
You should always start by considering the source of your income. If you’re not getting a certain amount of customers each month, you won’t be able to cover bills and make a return. A drop in income could be steady or sudden. In either case, it’s important to spot it as early as possible and find a way to solve it.
Generally, the solution is to attract more customers, which means more marketing. If you’re already struggling to pay bills, you won’t be able to spend too much on marketing so you may want to consider some of these low budget marketing options.
It’s possible that you may be getting customers, but your customers may not be keeping up with payments. You may have sent invoices that are still yet to be paid, or you may have customers paying instalments or subscription fees who have stopped paying you.
It’s important to keep on track of these payments and chase up any late payments. Options like invoice factoring may be possible to help you cover bills while waiting for invoices to get paid.
Refunds and cashbacks
Too many refunds or cashbacks could negatively affect your income. Refunds and cashbacks are typically down to poor service, but can also occur due to fraud or having a return policy that’s too relaxed.
Work out why customers are asking for refunds or cashbacks and try to tackle the cause. If products are arriving to customers damaged, consider whether you need to use a new courier service or improve your packaging. If deadlines on projects are being missed, consider finding ways to speed up productivity and make sure you’re not agreeing to deadlines that are too tight.
Too many debts
Almost all businesses have debts. However, borrowing too much money could result in large monthly debt repayments that could eat away at your returns.
Once debts start to become overwhelming, look into ways of reducing these debts. This could include refinancing debts or focusing energy into paying off smaller debts so that you have less debts to deal with. You may want to consider seeking out professional help with business debts. Cutting back on other expenses and finding ways to earn more could also help you to keep on top of debts.
It’s possible that other expenses could be interrupting your cash flow. These could be expenses that you haven’t budgeted for such as emergency repairs, bill increases or employee expenses.
Make sure to take a look at all your expenses to see where money is coming out. If you give employees control of money to spend, make sure that this is being monitored so that employees are not overspending. Remember that small frequent unbudgeted expenses like buying clients coffee can also add up.