No business is going to be able to operate unless it has a positive cash flow. Without money, employees cannot be paid, orders cannot be filled and inventory cannot be ordered. Therefore, it is imperative that you figure out ways to improve your cash flow situation if your company is experiencing financial difficulty.
Hire A Good Accountant
Accountants will go over all aspects of your company’s financial situation. All accounts receivable, accounts payable and any other money going in or out can be examined by a financial professional. This person or group of accountants will be able to tell you exactly why your company does not have a positive cash flow.
Follow The Advice Of Your Accountant
It is important to follow the advice of your accountant. While you always have the final say over what goes on in your company, there are reasons why your company is not doing so well financially. Therefore, you should be appreciative of the fact that errors have been pointed out to you. Making adjustments and improving the way that your company operates will have positive ramifications in both the short-term and the long-term.
Make Sure That You Are Getting Paid For All Of Your Work
It is common for customers to take several weeks to pay for their orders. However, you must not let customers off the hook for their payments. If you notice that you haven’t been paid according to the terms of the purchase contract, go after that customer until you are paid. For many businesses, a lack of desire to track down deadbeat clients can erase thousands of dollars in potential profits. Even if you lose a client, you deserve to be paid for your work. You should know that commercial debt collection companies can help you get all of the money that your business earned.
Don’t Spend More Than You Have
Although this sounds like something that every business owner should know, many companies spend more than they can afford to. Remember, a business loan needs to be paid back at some point. It isn’t meant to be used to buy a factory that won’t produce goods or to pay employees who won’t produce products or find new customers. If your company isn’t making as large of a profit as it typically does, don’t be afraid to shut down factories or let go of workers on a temporary or permanent basis. While those moves are hard, they allow the business to stay afloat. Your goal is to make a profit for yourself, not to provide a guaranteed job or better life for someone else.
Improving cash flow is an issue that all companies grapple with. Regardless of how large your profit margin is, you always want to make sure that you have enough cash to expand, pay for lawsuits and settle other issues that may arise. Therefore, don’t be afraid to hire outside experts to audit your company finances as it will be a good tactic to help your company stay financially fit.
This has been a guest post from Sally at Business Results Accountants in Brisbane. If you’re looking for accountants that are results oriented, and want to unlock the hidden cash in your accounting systems, get in touch.