6 Result-Oriented Tips for Entrepreneurs Experiencing Irregular Cash Flow - youramericanmoney
Author: Michelle
Description: entrepreneur
Date: 2018-05-08T16:00:00+00:00

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# 6 Result-Oriented Tips for Entrepreneurs Experiencing Irregular Cash Flow

posted on 8 May, 2018

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Most entrepreneurs have to deal with different challenges when building a business. Along the way, you realize that most problems can be quickly eliminated when you have enough cash. Basically, every business depends on cash flow to maintain a healthy workforce, procure supplies as well as obtain better infrastructure.

This implies that business owners who can’t control their cash flow are at a higher risk of failure. On the other hand, good management of your cash flow means you have the necessary means to take the enterprise to the next level. In this article, well discuss some tips to help you fix the cash flow problems.

*In order for me to support my blogging activities, I may receive monetary compensation or other types of remuneration for my endorsement, recommendation, testimonial and/or link to any products or services from this blog. Please read my disclosure here.*

## Forecast the future needs

Surprise expenses are a threat to a business. Most people will agree that trying to get some money when desperation has kicked in is a risky affair. If you want to stay ahead, make a habit of maintaining accurate business records so that you can get a clear picture of your financial situation.

By simply looking at your previous income records and cash flow statements, you can figure out how much money you have as well as the projected expenses in the next few months. This information can also forearm you and give you sufficient time to get ready for any future shortfalls.

When you can foretell the time when you are likely to experience cash flow issues, you can make arrangements with a creditor I advance.

## Establish a good rapport with lenders

In most cases, it is quite difficult to get a bad credit loan when you are already desperate. This is because a creditor’s first priority is getting the money back. To avoid this problem, start nurturing relationships with creditors even when you don’t need any loan.

Normally, finance providers are willing to accept different assets as collateral to the loan. a revolving line can be opened where you get an agreed amount of money depending on the accounts receivable in the next two or three months. Here, the provider allows you to take more money as the accounts receivable goes up but when it gets lower, you should pay the outstanding loan to maintain the agreed ratios.

If you have some inventory ready for the market, you might have an easy time getting funds since a borrower is willing to consider the collateral. In addition, working equipment can be used to secure long-term loans when the need arises. However, the most important thing is establishing a good relationship with your lenders and understand how they work.

Whether you want to take a line of credit or an installment loan, understanding the credit provider is important if you want to avoid setbacks. After you’ve been given the loan, always make sure you’ve paid back the entire amount and maintain a good credit rating.

## Make your money work for you

If you have significant cash balances, the money should be kept in an interest-earning account. If you encounter minimum balance requirements, it’s possible to keep a large percentage of the money in a high-yield account but you leave some cash to keep the business running.

Nevertheless, you should stay away from long-term CD arrangements because you risk losing the accumulated interest in the event where you withdraw before the term matures. Basically, you want an option that doesn’t impose tough penalties if you need the money urgently.

## Create attractive incentives for customers who pay early

Invoicing can be a real headache especially when you need to make multiple follow-ups. If you are not pleased with the idea of continuous follow-ups to make clients pay, it might be necessary to use an incentive and penalty approach.

To illustrate, you can start offering special discounts to any client who settles their account on time and on the other hand, accounts that haven’t been settled should incur interests. If this is implemented successfully, customers will feel the urge to pay on time and in turn, your cash flow difficulties will get lower.

In addition, this ensures that you no longer waste valuable time and resources trying to follow up. At the end of the day, you’ll have more time and better cash flow.

## Minimize the expenses

When trying to improve your cash flow, executing measures that cut back on expenses will ultimately free up some money. You can start by ensuring all your equipment is repaired at regular intervals to lower the likelihood of expensive replacements. During the repairs, try to find spare parts from alternative vendors selling at better prices.

If you have to upgrade any service or product, only do so when it is necessary. However, this doesn’t mean that you stick to substandard products that can endanger the business.

When looking for additional or replacement equipment, first check to see if you can get a refurbished machine which is in a great working condition. If you monitor the auctions, it’s possible to get impressive equipment at a fraction of the cost of buying brand new ones.

## Renegotiate with your vendors

While your vendors may insist that you settle the outstanding balances when goods are received, paying large amounts of money too early isn’t good for your business. Basically, it’s always best to strike a balance between timely payment and late payment. In a nutshell, choose to pay at a time when you won’t compromise your agreement as well as your cash flow.

If you feel that a vendor has some strict terms that might hurt your cash flow, its best to approach them and propose a renegotiated deal. If you are dealing with a company that values its customers, they would want to maintain the relationship by giving you a better deal.

## Conclusion

For a business to stay afloat, the cash flow must be improved. By constantly evaluating your finances, you’ll be able to identify a dry spell before it happens. Depending on the prevailing situation, you can take an informed decision after looking at your options.

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#### Michelle

I am an obsessive foodie, but not self-righteous with it, love travel, meeting new people, helping you look good, and am freaked out by people who don't enjoying reading...something! Grab a Perrier, read my blog, feel free to drop me a line! Hope to hear from you soon.

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