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Whether you are a self employed freelancer, managing a lucrative career from home, or the CEO of a thriving SME, you likely don’t need to be reminded of why cash flow is important to your business. All enterprises rely on a healthy interplay between credit and debt. If your debtors don’t pay you on time, you can’t pay off your creditors. Moreover, you’re left unable to invest seed money in your business which could facilitate the capital investments that could take your business to the next level. Although all businesses face a cash flow crisis from time to time, some are more severe than others. There will be times when despite your battle to keep down unnecessary overheads and your total transparency with lead times and invoicing, your business will be left with a temporary dearth of liquid assets.
Fortunately, there are a number of ways in which you can bounce back quickly without any detrimental effects on your business…
Business credit cards
If your cash flow needs are relatively modest, you could find that business credit cards are an effective way of digging yourself out of a fleeting rut, giving you the liquidity you need to stay agile and take advantage of a bargain batch of stock or a tool that will improve productivity. Although you may not be extended the same amount of credit or competitive interest rate of a loan, business credit cards can be very useful as long as you factor the interest rates of your repayments into your monthly costings.
They’re also useful for quick credit as many lenders issue the credit card number upon the point of approval so you don’t even need to wait for the card itself to arrive in the post.
If you’d rather steer clear of credit cards, a bridging loan may be a perfect way to lay your hands on quick cash to keep your business afloat. Bridging loans are fairly admin light, meaning that they can be approved and transferred into your business account far faster than other forms of business loan. Be wary, however. This speed and efficacy comes at a cost of high interest rates. Bridging loans are only useful if they can be paid off quickly. This makes them perfect for businesses that have a big pay day coming but the client is running a little behind on making payment.
Speaking of late paying clients, they are an unavoidable part of doing business. Most of the time, the reasons behind late payments are fairly innocuous, and only very rarely will a client demonstrate a total inability or unwillingness to pay. Using a service provider like this factoring company is a great way to get instant payment for outstanding invoices. If your client is only a day or two late in payment but you have bills that need to be paid today, it’s the perfect solution.
If you have a whole lot of stock but are struggling to shift it in time to pay your debts, it’s time to throw a quick sale. Promote your special rates on your online presence and watch bargain hungry customers roll in. Sure, you might take a hit on your profit margin, but a lot of sales at low margin are better than no sales at a high margin. Plus, so long as you’ve made efforts to retain this influx of new custom, you’ll see them come back even when your prices go back to normal.