Cash is undoubtedly one of the most critical components for any business, regardless of its size or operational scale. Unfortunately, many companies lack the required cash flow to address all their immediate operating expenses. However, businesses can eliminate such cash flow crises by adopting sound financial management techniques and strategies in general.
Typically, businesses tend to suffer from cash flow problems due to these following reasons -
To address this problem and ensure that their cash flow remains unhindered, businesses can r avail invoice discounting services from KredX. We are a leading integrated cash flow solution provider in India, helping businesses bridge their working capital gap by extending instant access to funds.
These are among the most powerful cash flow management strategies -
By preventing cash flow shortfall, you can tackle such problems to a great extent, and one of the best ways to do so is through forecasting. Several accounting tools are available that help businesses estimate how much cash they will require in the next few months. This directly aids in building a sound financial plan and a reasonable budget for the business in advance.
Businesses that are subject to cash flow problems frequently must make it a point to audit their finances. It will help to review inflow and outflow of cash and prove useful in identifying and reducing unnecessary expenses.
Business owners must make it a point to find a flexible line of credit to access funds as and when required. Typically, there are several funding options like business credit cards, business loans, invoice financing, and overdraft facilities for businesses to choose from. Nonetheless, a business should pick a line of credit that not only offers quick access to funds but also comes with attractive terms of services.
For instance, KredX’s invoice discounting platform allows businesses to use unpaid invoices to get access to working capital within 24 hours to 72 hours*.
Bad debts and delayed payments are among the most dreaded factors that hamper the cash flow of a venture. This is why you must make it a point to check the creditworthiness of your prospective clients before selling goods or services to them in credit. The better you are at credit control, the more effectively you can protect your business against insolvency.
You must also try to negotiate better terms of repayment to maintain healthy cash flow at all times. Typically, the key is to extend a shorter repayment term to debtors while asking for a flexible term of payment from your creditors. By following such an approach, one can maintain adequate cash flow and working capital most of the time.
The longer a company holds on to its stock, the faster it loses value in the market. It is because each day, newer and better products are entering the market and raising the competition level for existing ones. Also, stocking up on finished products and raw materials is another way of blocking cash for a long time, which in turn hampers the current liquidity of the firm.
A short working capital cycle is the quickest way to ensure smooth cash flow. Businesses must collect their accounts receivables at the earliest to boost their firms’ liquidity. Also, they may consider extending discounts on early payments to encourage faster pay-outs.
Other than these, businesses should also focus on risk management and follow an organised accounting system to solve cash flow problems more proficiently.
Like discussed, you can also meet cash flow requirements by availing KredX’s invoice discounting service. Upload your unpaid invoices on our portal and access working capital in no time.
KredX operates in more than 120 cities across India and has helped over 15000 businesses solve their cash flow and working capital crisis.