Cash flow problems as a start-up can be worrying. Every business may experience cash flow problems; however, a young business owner may not be able to see clearly through the stress that comes with it.
Understanding how the cash flow problems began is just one of the many steps you should take to gain back control of business finances. After you understand where the issues stem from you can build your business processes to anticipate future problems.
Here are several tips on how you can navigate cash flow problems as a startup business.
Budget your business to guide cash flow
Budgets are essential as a start up. You should revisit your budget and make sure you are sticking to it. It can be easy to go over budget and allow yourself to ignore it, but a budget will help you make sure your business is healthy in those early years.
Consolidate debts into one payment
Having multiple debts can become confusing. Ideally, you want to keep debts down to a minimum as a startup business, but that isn’t always the case. Keep things clear and easy but consolidating your debts into one easy payment. This isn’t the go ahead to take out short term loans that have high interest rates, that could be devastating to your business. But if there is the option to easily move debts into one payment, you should consider doing it.
Streamline invoice processes to prevent cashflow problems
Invoice your customers properly. If you aren’t sending out your invoices in a timely manner how can you expect your client to pay you on time? Streamlining your invoicing process will ensure that invoices are being sent out. Include all relevant information in regards to payment terms and don’t be afraid to send follow up emails if payments haven’t been received. You need to protect your business and chase up those unpaid invoices. We have a blog all about late payment risks and how to follow up late payments here.
Amend payment terms to benefit your cash flow
If your business is experiencing extreme cash flow problems you may want to consider amending your payment terms. Consider taking a percentage upfront before any works are carried out. This way your client is already invested in your business and receiving your product or services.
Invest in sales processes to increase cashflow
Sales are what makes or breaks a startup business. Consider looking at where you can upsell or cross sell your services. Before looking to grow your business and gain new clients, consider how to increase your current client’s average invoice. After all, they are already invested in receiving your products and services.
Know your worth. Increase your prices and keep the quality of your work high. When you are experiencing cash flow problems as a start up it may be down to the prices you set yourself.
Use different techniques to entice customers such as perceived value sales and other strategies. But always make sure you are breaking even as a minimum on a project. Cover your expenses and that will ensure you don’t end up in financial trouble.
Cash flow issues come and go, but if you are having trouble claiming unpaid invoices consider working with a debt recovery agency. Here at My Debt Recovery, we work with you to reclaim unpaid debts. Our team applies a human first approach to collecting debts. This means that we work with both you and your client to ensure that everyone is happy with the terms and conditions of the way the debt is collected.