5 Common Cash Flow Management Problems and Solutions in 2023

common cash flow problems

Making sales is great, but if it’s not backed up with the customers paying on time, you’ve got problems – and there are many potential causes of late payments. Collecting your trade receivables too slowly can seriously inhibit your cash flow opportunities, stifling growth and potentially causing you problems with paying your own bills. Another solution is to work closely with banks and other financial institutions to understand the implications of regulatory changes on cash management. Banks can provide valuable insights into regulatory changes and their impact on cash management services, as well as help companies navigate the changing regulatory landscape. This might involve implementing a cash management system that integrates with multiple banks and provides a single, standardized view of cash positions and transactions across all accounts. By automating the data collection and consolidation process, companies can reduce the risk of errors, improve efficiency, and gain greater visibility and control over their cash positions.

Cash forecasting is the number one priority for treasurers, as their job and core responsibility is to have complete control, management, and oversight of the finances within a company. It’s extremely important for a treasurer to have accurate, real-time data and forecasts so that they can make the right decisions for their company and avoid any financial turmoil. Easily move money between your currencies when you need to and make payments with one click.

Ineffective Receivables Management and Slow Payments

If you land a new client with large requirements, for example, you might be required to make new hires to meet demand. However, if you don’t have the cash to pay them when it comes to the end of the month, you’ll find yourself in need of credit. You might also want to reconsider operating cash flow to keep costs down while you build up reserves. Additionally, you should also reconsider payment dates to vendors and from your customers to minimize gaps and keep cash flow balanced. Solutions such as invoice factoring can also help in the short term, where you ‘sell’ portions (or all) outstanding invoices to a third-party company.

Especially hidden costs, like subscription fees, overheads, and insurance premiums. However,  you can take  plenty of cost-cutting measures to fix cash-flow problems. Sometimes, an adjustment in business strategy is all you need to stay cash- positive. Other times, you might perform a cost/benefit analysis to see common cash flow problems if a business loan can help. You can also look for alternatives to conventional financing, such as an online marketplace. Some business loans are available even to businesses with bad credit, and some online lenders consider factors other than credit ratings to determine if a company qualifies for financing.

What Are the Main Causes of Cash-Flow Problems for Small Businesses?

Without upfront payment, businesses can get into cash flow problems due to late accounts receivable. You plan out your upcoming bills, and then a customer misses a deadline, and you’re left scrambling to find funds. For example, companies can use cash management software to automate data collection and consolidation, cash forecasting, and liquidity management. This can help to improve efficiency, reduce errors, and provide real-time visibility into a company’s cash position.

common cash flow problems

Furthermore, the more you follow the business world, market, and competitors, the better chance you’ll have at predicting external effects and staying ahead. A key way to ensure that cash flow is being managed is to do a cash flow analysis at regular intervals to monitor the business and its financial health. Starting with high price points is not a good solution either if they want to attract demand and establish a strong customer base. It is common for such companies to incur negative cash flow from investing activities.

Deja un comentario

Tu dirección de correo electrónico no será publicada. Los campos obligatorios están marcados con *

Scroll al inicio