Tips to Prepare for Any Cash Flow Crunch
Running out of cash is one of the major causes of small business failure. Whether you’re just launching your business or looking for a way to keep it afloat during a tough time, use these cash flow tips to improve your cash situation and rise above the usual ebbs and flows of the business.
Use Invoice Financing
A great way to keep your working capital and save an emergency fund is to use invoice financing. Sell your invoice and all collection responsibility to a lender. You’ll receive a large percentage of the invoice back immediately in cash. While this strategy requires you to pay a portion of the invoice to your lender, you won’t have to wait the typical 30, 60 or 90 days to receive payment. You’ll also be saved from any issues related to late payments.
Choose the Best Business Credit Cards
A business credit card is an incredibly flexible tool to help manage your cash. If you have cash going out before it comes in, a credit card allows you to balance some of your monthly spendings. It’s perfect for day-to-day expenses for your business. Pay your credit card off every month and you won’t have to worry about interest rates.
The best business credit cards also allow you to earn points. These points can be used to spend on vacations, work trips or even used to hand out bonuses to your employees. Enjoy these and other perks in your usual spending and avoid the risk of overdrawing your account as you wait for invoices to arrive.
Open a Line of Credit
Similar to a credit card, a line of credit is a revolving credit option for unexpected expenses. A line of credit, however, typically has a much higher credit limit and a more generous interest rate. Enjoy the cash you need to keep your business operating without taking out a long-term loan or spending a large number of high-interest rates. A line of credit may need collateral as backing, so consider what real estate or equipment you can use to back your credit line.
Consider Short-Term Loan Options
These are just a few of the short-term cash flow options available to you as a business owner. Explore other loan options to discover the best way to improve your business. Stay on top of your expenses and grow your business confidently with these flexible sources of cash. Whether you have a short-term need or you’re looking for long-term growth opportunities, the right financial solution can propel your business forward.