3 ways to deal with short-term cash flow problems

It’s one of those problems that blights young companies all of the time – and it’s frustrating to say the least. Your business might be ticking all of the boxes in terms of generating customers and profit, but if the cash flow that follows this is delayed it can really grind things to a halt. Or, in some circumstances, it can send you out of business completely.

Fortunately, there are ways to navigate these cash flow problems. Admittedly, it’s never easy, and you might have to make some initial sacrifices. These sacrifices usually involve paying, in some shape or form, for a way to get over your cash flow problems. While this might be tricky to accept for now, it’s worth remembering that once established your business will have much more cash flow leverage.

Following on from the above, let’s take at the three main ways you can tackle cash flow problems once and for all.

Identify funding solutions

Whether it’s raising finance against your own assets, or even considering a really short-term solution – make sure you explore all finance options before throwing in the towel.

In truth, the options are far and wide. If you own your own premises, you naturally have some leverage you can use. At the same time, if your credit up until now is healthy, you also have options. This financial advice for directors might come into some use if you need to calculate how to turn around your business from immediate cash flow issues.

The era of invoice factoring

This next suggestion is perhaps one of the more modern solutions, and there’s no doubt that it can have some immense expense attached. However, in the interest of rescuing your company out of a short-term financial rut, invoice factoring really can come to your aid.

In short, this refers to the process of selling your invoice to a company. Of course, they don’t pay the “full rate” for this invoice – industry standards suggest you’ll be lucky to get 85% of the value. However, it does mean that you don’t have to deal with slow payers – and this in itself can mean that it’s completely worth the 15-20% that is usually charged by companies involved in this space.

A helping hand from HMRC

We all know about HMRC – most of us squirm as soon as we hear the name. However, you shouldn’t always think that the tax authority is there to stifle you at every opportunity. Sure, it’s there to collect your money, and it’s also true that they are more alert than ever before when it comes to chasing liabilities.

Despite the above, don’t assume you can’t appeal to their better nature. There are occasions where they will listen to requests for additional time to repay, as long as you are armed with a good reason. Granted, it’s not going to work on every occasion, but don’t fall into the trap of always writing off HMRC.