Here are three ways you can ease a short-term cash crunch fast.
1. Collect Your Money Now!
Do you have clients who have not yet paid you what they owe? Pick up the phone and give them a friendly nudge!
Making collection calls does not have to be nasty business. In fact, it can help solve problems before they become large, and may even spark new sales! All you have to do is call to check on the status of the invoice.
Doing this reminds them to pay you, and builds a good relationship. Try it and you should see more cash coming in quickly.
2. Create a Quick Boost in Sales
One the easiest ways to solve a cash flow pinch is to run a special limited-time promotion to pull in some quick sales. Choose one of your services or products that are popular and make an irresistible deal. You might even create a special package deal. Let all your existing customers know about the special promotion and you’ll pull in an instant infusion of cash in short order!
Short-term sales may not resolve the reason for the cash crunch, but it will buy you some time and give you some breathing room so you can focus rationally on what’s really going on in your business.
3. Delay Payment on Your Bill
Look at the bills you owe that are due within the next week to 10 days. Can you delay payment or pay them only partially to preserve the cash you do have?
You may even find that there are some bills that you regularly pay that you could eliminate altogether, if they don’t contribute to the bottom line. Cutting a bit of fat is always a good thing!
While this step may not be an ideal way to make it through a cash flow crunch, it can work as a survival tactic.
Beyond Cash Flow Survival
To permanently banish recurring cash crunch woes, you can’t keep living in the moment. You need to identify what has shifted or is changing so that cash has become an issue. In fact, you need to come up with a strategy to protect yourself for the long term.
Here’s my three-phase method for conquering the cash flow crunch monster before it gets out of hand:
1. Identify and maximize the money coming into your business from as many different sources as possible. Create cash-producing systems and policies that keep the incoming money flowing consistently and simultaneously.
2. Evaluate what it takes to run your business and how much it costs to sell your products or services. Identify your most profitable offerings, and dump any that do not have a reasonable profit margin. This type of periodic review of both your income and expenses will help you see important trends and give you more time to adjust your course and avert future cash shortages.
3. Prepare a budget and cash forecast for at least the next 3 months, and keep track of your progress. If your business is seasonal, you will need to build into your budget a cushion fund that you will contribute to in the busy season, and draw upon in the slow season.
By going through these basic steps, your business will become much stronger and you’ll be in the driver’s seat. You will be able to recognize and navigate changes that affect your cash flow and future growth. This also protects you from cash crunch crises long before they ever hit.