5 Strategies to Help You Overcome a Cash Flow Crisis
Small business owners were optimistic heading into 2022. Even so, money remains a considerable concern after two years of the pandemic. According to the Small Business Index, a report compiled by the U.S. Chamber of Commerce and MetLife, 34% of small business owners reported revenue as their top challenge, along with other concerns such as inflation and employee retention.
Savvy business owners know they need to employ smart tactics, such as acquiring a business line of credit, to prepare for potential cash flow problems and meet the money challenge head-on. Here are five strategies to help business owners improve cash flow and survive the dips of business ownership.
1. Use Small Business Lines of Credit
Many business owners don’t realize how vital cash flow is for their business’s survival until working capital has dried up and their bank account is sorely lacking. Cash flow forecasting and consistently monitoring your cash flow statements can help. Knowing when cash flow issues may erupt means a business owner can create a plan to increase cash flow before there’s a problem. One crucial component of planning your cash flow management is to acquire a business line of credit.
A business line of credit is a short-term loan, typically loaning smaller amounts of cash, used for regular operating expenses such as covering bills or payroll during a working capital shortage. A business line of credit can function as an emergency fund ready to tap into whenever needed.
Business lines of credit are revolving credit, like credit cards. Borrowers are approved for a preset lump sum and can use any amount of the money (up to the credit limit) for business operations. Borrowers then make payments on the borrowed amount until the money is paid back. Payment terms dictate that the interest rate is only paid on the borrowed amount and not the entire sum. Also, like credit cards, once the money has been repaid, it is available to borrow again.
A business line of credit works for any business model (companies selling products or services). Plus, it has many advantages, including a simple application and a quick approval process. And a business line of credit can also help improve a company’s credit score—if the payments are made on time.
2. Start Selling Non-Essential Assets
Every company has both essential and non-essential assets that contribute to the business’s operations. Essential assets, such as equipment, vehicles, or intellectual properties like patents and trademarks, are critical for a company to generate revenues and profits.
Non-essential assets may also include equipment and vehicles; however, these assets may be outdated or sitting idle. To improve cash flow, many business owners decide to sell non-essential assets. Selling unoccupied buildings or land is also a good source of extra funds. However, unlike a business line of credit that you can repeatedly use, once non-essential assets are sold, they no longer serve as a funding source.
3. Improve Inventory
Cash flow is greatly dependent on how your company sources and manages inventory. A high inventory turnover means your business has successfully conquered inventory management, you’re on top of sales demand trends, and your company is reaping the rewards of steady cash flow.
On the other hand, cash flow can be tied up when you have excess surplus inventory because you ordered more products than you could sell. No matter how small or large a business is, sophisticated inventory control is key to positively managing cash flow. Make it a priority to invest in inventory management software, and in the meantime, a business line of credit can help you get through the challenge of low cash flow.
4. Make Adjustments to Improve Profits
When was the last time you took a look at your company’s business plan and operating procedures? Often, making adjustments can help improve your financial strategies and eliminate obsolete policies. For example, how are the company’s account receivables faring? Do you send invoices on time or get around to it when you can? Have you considered offering discounts for invoices that are paid early?
Next, take a look at your monthly expenses. Is there anywhere you can cut back? Most business owners pay for subscriptions they rarely use or for unneeded services. If your company consumes a lot of energy every month, is it time to install solar power or allow more employees to work from home? You can make saving money a company event by asking for suggestions on where to cut back and offering a small prize for the best recommendations.
5. Increase Prices
Many companies are raising prices these days, and most consumers are not surprised by these price hikes. However, you should be ready with a clear explanation of why you’re increasing prices, in case customers want to know. And it’s crucial to keep your price hikes within reason. Although consumers may accept higher prices today, they are still finely attuned to what’s reasonable, and you don’t want your company to get a reputation for price gouging.
It’s also vital to give customers plenty of notice before raising prices. Also, offer them other ways to save money, such as ordering in bulk or prepaying for a discount.
Where to Find a Business Line of Credit
Every business has unexpected financial emergencies. Planning for future cash flow shortages helps ensure that your company will survive to see another day. At Financing Solutions, we make getting a business line of credit fast and easy. We ask for very little paperwork, and it’s possible to get your money the same day.
Financing Solutions is an alternative lender offering an easy application process (it takes less than two minutes to fill out) and requires no collateral or documentation for a written offer letter. Other alternative lenders have a much longer application process and can be pretty expensive.
The founders of Financing Solutions have started and grown several companies together, so we understand how important it is to keep costs low. That’s why we don’t charge you to set up the credit line, and there are no maintenance fees. We don’t ask for personal guarantees, and applicants can receive a no-obligation offer letter the same day. We make approval decisions based on our decade of experience working with small businesses.
Find out today why we’ve earned five-star ratings from the Better Business Bureau and Google. Also:
- There are no costs to set it up or keep it in place
- The easy 2-minute application online application
- If approved, you’ll receive a same-day, no-obligation offer letter
- The fastest setup, 48-72 hours
- Once you have the line of credit, requests for funds are wired to your bank in minutes
- You can use your line of credit whenever needed
- Inexpensive when used (low fees)
- There are no restrictions in place or collateral required
- No personal guarantee is required, either
- Financing Solutions is a leading provider of lines of credit
- We are a reputable company with an A+ & 5-star rating
- You can pay off the line whenever you are ready
- The credit line is easy to renew and renews yearly
- You have a secured account portal access 24 x 7
A business line of credit is a reliable funding resource available whenever your company needs it. And it has fewer requirements than traditional term loans. If you want to see if your small business would be approved for a business line of credit from Financing Solutions and for how much, please fill out the no-obligation