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Independent businesses need to improve cash flow to survive. Worrying statistics from a ONS study show that up to 55 per cent of start-ups fail to survive their first five years. Poor cash flow is the main reason for failure (90 per cent). Problems with cash flow appear when a business is paying out more than they are receiving. Not knowing how to improve cash flow leaves a company without necessary funds to pay their expenses.
Previously, we have looked at the negative effects that late payment of invoices can have on a small business. Today’s late payment culture is affecting cash flow for many businesses, creating a knock-on effect and hitting small business owners the hardest. It’s vital to understand how to improve cash flow and keep it as healthy as possible, in order to give your business the best chance of success.
A lack of available funds restricts the growth of a business in a number of ways. This leaves business owners wondering how to improve cash flow in order to expand.
Small businesses fall foul of missing out on good opportunities for expansion due to a lack of available cash. Not being able to purchase a new piece of equipment, or being unable to purchase stock in bulk to secure the best price minimises a company’s efficiency and profits.
Similarly, being unable to pay for extra staff or resources means that accepting large orders is often impossible. A small business in this situation will find it extremely difficult to grow without the added profit from these unfulfilled orders.
Poor cash flow can also be damaging to professional relationships, including suppliers and staff members. A business is seen as unprofessional if a lack of available funds means that paying an invoice is delayed, potentially causing tension and costing future deals. Staff members will be negatively impacted by late payments of wages, leading to an unenthusiastic workforce with doubts about their future.
Here are a few things to consider when trying to improve your business cash flow:
If you’d like to find out how to improve cash flow with a business cash advance, get in touch with one of Quick Capital’s friendly advisors today and see how much you can raise.