Many businesses find themselves suffering cash flow problems at some point. This can arise as a result of trying to grow the business, but not having the necessary cash, or simply relying on the receipt of a book debt to pay the wages on a Friday.
Nobody likes dealing with the time-wasting and energy-sapping telephone calls from creditors. The depressing drive to work in the morning, knowing the problems that are going to be faced that day are probably the same as yesterday, last week, last month.
Solving cash flow problems can seem like an impossible task when you are stuck in the middle of them. However, recognising the symptoms of a cash flow problem is the first step to establishing that you may need professional advice to find a solution.
There’s no shame in seeking advice. Everybody has heard the saying “a problem shared is a problem halved”. Well what if a problem shared was a problem solved…
Depending on how long you have been suffering the symptoms it can take a while for a business to recover fully, but by recognising the problem earlier there are many more options available to a business.
So what symptoms could your business/your client be experiencing that could mean an underlying cash flow problem? I challenge you to take a step back, look at the list below and see if any of these points sound familiar.
- Do you find the business continuingly up to the overdraft limit? Do you experience returned payments from the bank?
- Do you find that you need to stretch payments out of the business in order to pay salaries each month?
- Does the business have a number of trade creditors in arrears? Do you find your staff having to delay payments to suppliers?
- Does the company find itself with a build up of HMRC debt? Are you able to pay VAT returns on time? Perhaps you have previously delayed a payment to HMRC in order to pay salaries/purchase stock last month?
- Does the company have rent arrears with the landlord? Is there a real threat of the landlord taking action? The powers available to landlords are different than normal creditors; an unpredictable landlord in arrears can be a real problem for a business.
- Do you long for the day that the business has at least some working capital ‘buffer’? Are you fed up having built up your business over a period of years to find yourself now surviving day to day?
- What do the accounts for the business tell you? Is there negative working capital on the balance sheet? Does it show continued losses? Talk to your accountant, can he see any underlying issues?
- Do you know what needs to be done to improve profitability, but find your hands tied by a lack of funds for remedial action such as redundancies/premises relocation?
- As a business owner, are you unable to support the lifestyle you desire/deserve due to the lack of profitability in the company?
If any of these bullet points sound familiar than there is a high chance that the business is suffering from a cash flow issue. There are many ways to address business cash flow problems but the best start is to acknowledge the problem and to speak to a cash flow expert as soon as possible.
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