4 Excuses for Your Cash Flow Problems

Cash flow problems can end your business, deplete your personal assets or lead to foreclosure. It is important for you to get a handle on them and avoid making excuses. Here are 4 common reasons why you may have cash flow problems, and some advice on how you can fix them.

1 - Record Keeping is Hard

One of the best ways to avoid cash flow problems is to keep accurate and up to date records of your finances. If you try to estimate your financial affairs, and base decisions on guess work and ballpark figures, you will run into problems. You don’t have to keep manual records in a notebook anymore, because there are so many software programs available to you. It’s possible that you may have a great program already installed on your computer. Find a software program that’s user friendly, such as Quicken for personal use or Quickbooks Pro for business use, and use it to record all of your money transactions.

2 - Too Many Expenses

If you have too many expenses, you will run into cash flow problems. Begin by taking some time to assess what you really need to function personally or in business, and cut the fat. Find alternative ways to keep your costs down. For example, if you’re a business owner, you could consider outsourcing work to an independent contractor, instead of paying an employee.  Or, you can change bank accounts to one that charges little, or no fees, instead of maintaining accounts that charge monthly fees.  The first step you have to take is to create a budget. Then, see what expenses you can eliminate or reduce and don’t be afraid to make those changes.

3 - Lengthy Sales Cycle

The time it takes to close a deal, deliver services and collect payment in your business may be too long. Consider ways to shorten the time to avoid cash flow problems. For example, if you changed your sales or business structure so that you receive full payment within 30 days, as opposed to 60 or 90 days, then you could have access to money much faster. You can avoid late fees and other penalties by paying your bills on time, instead of having to waiting weeks or months for customers to pay you.

4 - Lack of Customers

If you lack customers, then you need to do more marketing. You’re either not marketing effectively, or you have chosen the wrong market. It may be time to enlist the help of a consultant, or take a marketing course or seminar to help you perform better in this area. One of your problems could be that you’re spending too much marketing dollars on a method that’s yielding no results. You should study the results of all of your marketing efforts to see what has worked and what has not.

Taking charge of your cash flow problems is a something that all entrepreneurs and investors must learn how to deal with. The key is to stop making excuses and to take the steps you need to improve your finances.

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