Cash Flow Q&A: “What can I do if I’m headed for a cash flow crunch?”
What can I do if I’m headed for a cash flow crunch?
Hi there, I’m Blaine with Dryrun.
A question I’m frequently asked is how can I deal with an impending cash flow crunch?
Well the tricky part there is that every business is a little bit different. Your business model is different, how that money is coming and going but there are a few tricks that are going to help you along the way.
The number 1 thing that is going to help you in a cash flow crunch is simply seeing it coming far enough down the road. So that means make sure you are updating your projections frequently, you are viewing your cash flow weekly, monthly so that you know when something is coming. The more time you have, the more options you have.
Now is there a customer that you might be able to contact that you have already invoiced and say hey, if you speed up payment, I’ll give you a little bit of a discount.
Or are there jobs or products that you are shipping out of your business that you can speed up and get out of your door faster? That means you can invoice faster and you can get paid faster.
Is there any big payments that you can delay? Is that big purchase that you are going to do, is it necessary right now? Are there some payments that you actually had scheduled to pay but maybe they aren’t actually aren’t due right away. Can you push it back to the actual due date?
And finally, you may have to go to your bank. And you may have to look for some kind of short term financing, an extension on a line of credit. The biggest thing with the banks is that they like to have a lot of lead time and they like to have a really solid plan in place.
So again it goes all the way back to making sure you are projecting your cash flow and you know what’s happening in your business well ahead of time. That gives you options and it gives you flexibility.
Now if you have any suggestions that have worked really well for you, please drop them in the comments below. I’d love to see them and I’m sure all these other small businesses would like to see your suggestions as well.
Dryrun is a simple way to forecast your cash flow, build budgets and track sales projections.