Search
Close this search box.
Blog » Business Tips » 5 Steps to Fixing Your Cash Flow Problems

5 Steps to Fixing Your Cash Flow Problems

Updated on October 20th, 2021
Manage Cash Flow

Managing the flow of cash for your small business can be incredibly stressful, especially if your creditors are hounding you or your employees are waiting on a paycheck. But fixing your cash flow problems doesn’t have to be difficult. For the most part, making sure you have the money you need at the right time comes down to taking a few simple precautions and being educated on what’s causing your specific cash flow issues. Here are five ways to get your business back in the black so you can stop worrying.

Eliminate Unnecessary Overhead

If you don’t need it, you shouldn’t be paying for it. That’s the bottom line when it comes to cutting out all those little expenses that chip away at your cash. Don’t assume that you need something just because it seems like a professional businessperson has got to have it. Do you really need physical business cards? Maybe not. What about an office? Perhaps it wouldn’t be a problem to work from home. Have your vendors talked you into paying for an upgraded product or service that isn’t benefiting you? Don’t feel bad about letting them know it’s no longer in your budget.

Make Sure You Have a Cash Reserve

Despite the safety net of a good contract, you may have a client who pays you late–or worse, not at all. When a deal falls through and you don’t get the funds you’re expecting, it’s a lifesaver (and often a business saver) to have a cash reserve that you can rely on. Play it safe so that you can sleep at night knowing you’ve got yourself covered in case of an unexpected cash shortage, and don’t forget to make replenishing it a priority if you do need to use it.

Keep Your Taxes Under Control to control Cash Flow

Stay organized throughout the year by using an app to track your business expenses, then hire a professional at tax time to make sure you’re taking every last deduction that you’re entitled too. It’s important to give Uncle Sam his due, but your suppliers and employees need to be paid as well. Perhaps you’ll find that paying quarterly taxes is easiest for you. Maybe it will be simpler for you to pay them all at once. Whatever you decide, make sure to strategize with your accountant or tax preparer so that you’re running a lean operation with no extra dollars flying into the pockets of the IRS.

Use Technology to Track Cash Flow

If you’re using a ballpoint pen and a college-ruled notebook to keep track of your expenses, it’s no wonder that you’re struggling with cash flow. There are so many high-quality inexpensive (or even free) types of accounting softwares. They keep track of who you owe, when you owe them, and how much you owe. Not sure where to start? While Quickbooks is probably the most well-known, you won’t go wrong with other options like Freshbooks, Xero, or Wave Accounting (that last one’s free, so you don’t have any excuses not to try it if money’s tight).

Don’t Keep Extra Inventory on Hand

Your goal is to meet demand–and no more. Run out of stock on a popular item? You can just let your customers know when you expect to get it back in stock. Consider rewarding them (if you can afford it) with some small additional benefit. It’s better not to use up your cash (and your space) on extra product that you can’t guarantee you’ll be able to move. If you do end up with extra inventory, quickly offer a sale or discount so it will fly off the shelves quickly and pad your wallet.

William Lipovsky

William Lipovsky

William Lipovsky owns the personal finance website First Quarter Finance. He began investing when he was 10 years old. His financial works have been published on Business Insider, Entrepreneur, Forbes, U.S. News & World Report, Yahoo Finance, and many others.

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.
Categories

Top Trending Posts

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More