Your cash flow is what keeps your small business moving forward. That’s why you should always keep an eye on it and ensure to avoid these four common cash flow mistakes small business owners tend to make.
Give in to Impulse Spending
Anyone who has ever started a business knows that getting your own venture off the ground can be an exciting adventure full of possibilities.
However, it’s easy to get caught up in the thrill of seeing your ideas come to life. You begin spending too much, the impulse purchases add up, and before you know it you are dealing with a considerable dent in your cash reserves.
Regardless of the cause, when you are faced with a cash crunch, borrowing money should be a last-resort measure. If you already have cash flow problems, adding the weight of repaying a loan is usually a recipe for disaster.
Before diving into debt, you should consider other alternatives, for example:
- Running a promotion
- Cutting expenses
- Factoring your accounts receivable
Failing to Keep a Contingency Cash Reserve
As the old saying goes, you should always save for a rainy day.
With so many factors at play when you run a business, the laundry list of potential stumbling blocks is almost endless: a provider may increase prices, an unexpected event may disrupt the supply chain, or an important piece of machinery may break down.
An emergency cash reserve is one of the most efficient ways to get protection against these and other unforeseen circumstances that can put a strain on your cash flow.
Neglecting Your Accounts Receivable
It’s simple math: neglecting your accounts receivable is a sure-fire way to create cash flow problems for your organization.
Being diligent with your receivables is essential to ensure a positive cash flow. This includes ensuring that payments are collected on time, but also finding ways to deal with clients who may be slow to pay but otherwise reliable.
Factoring is a convenient and easy way to manage your accounts receivable. When you factor your invoices, you sell them to a company called Factor that pays you upfront and takes care of the collection process in exchange for a small fee.
This way you get the cash right away, without having to pay 30 to 90 days to get paid!
ACS Factors: We Turn Your Invoices Into Immediate Cash
At ACS Factors, our mission is to help you get the capital you need to move your business forward regardless of your industry or the size of your organization.
We are located in Upland, California, and have many clients in the distribution and logistics corridor which includes Ontario, Riverside, Fontana, Jurupa Valley, and Moreno Valley.
Reach out today by email (email@example.com) telephone (909-946-5599), or through our social media accounts on Facebook, Twitter, and YouTube, and start converting your accounts receivable into cash today!