June 28, 2022 Pure Code

3 Common Cash Flow Problems and How to Address Them

3 Common Cash Flow Problems and How to Address Them

It’s no secret that cash flow is one of the biggest challenges small businesses face. In fact, 82% of businesses fail due to cash flow problems. Without a steady flow of cash, your business can quickly run into trouble. Several factors can affect your company’s cash flow. From Pure Code Digital Agency, here are three of the most common.


1. Struggling to Make a Profit

This is the most obvious reason for a cash flow problem — you’re not generating enough revenue to cover your expenses. You need to increase sales and/or reduce costs.

There are several things you can do to increase revenue, such as increasing your prices, adding new products or services, targeting more high-value customers, or boosting your marketing efforts.

Marketing your business is a key factor in increasing sales, but it can be costly. There are many low-cost or free marketing strategies you can use, such as creating a website, writing articles or blog posts, posting on social media, networking, and conducting online and offline advertising.

Investing in a professional logo design can also help you attract more customers. A well-designed logo and website make your business look credible and can improve brand recognition.

To save on costs, you can do it yourself by using online tools and templates. Choose from an array of logos, and customize them with your preferred fonts and colors. Just make sure your logo design and website are professional-looking and accurately reflect your business.


2. Outstanding Receivables

Sometimes, cash flow problems are simply the result of slow payments from customers. Having a system in place to ensure that payments come in on time can help alleviate this problem. A solid payment and invoicing system helps you send invoices promptly, reward customers who pay early, keep track of payments, and follow up on late payments.

If you run a service business, you can also request a deposit before starting work. This ensures you have some cash in hand to cover your expenses until the work is completed.

Finally, have a good credit policy in place. This helps you get paid faster by giving customers incentives to pay their bills on time.


3. Failing to Manage Cash Flow

Ineffective cash flow management is another common reason for cash flow problems. This includes not having enough working capital, not budgeting properly, and not investing in systems that help you manage your cash flow.

Working capital is the cash available to a business to cover its current liabilities. It’s important to have a cushion of working capital to cover unexpected expenses and to give you time to pay your bills.

Finally, invest in systems that help you manage your cash flow. This includes good accounting software and efficient invoicing and payment processing systems. You want to ensure you have a client invoicing solution that results in faster remittances. Having a paperless billing solution with online payment processing means your clients receive their bills faster and can pay quicker. These systems automate many of the tasks involved in managing your cash flow, which frees up your time to focus on other aspects of your business.


Take Charge of Your Cash Flow

If you’re experiencing any of these common cash flow problems, don’t worry — you can take steps to resolve them.

Pure Code Digital Agency