How to Escape the Cash Crunch
When you’re in business, one of the scariest things in the entire world is facing a cash crunch. There are bills to pay to stay in business. Then, there’s pay roll. Oh, and don’t forget about those taxes. It’s enough to give any business owner a migraine. This article will discuss a few different ways that you can escape or even avoid the cash crunch.
Get More Accounts
Sometimes in business, the month just gets away from us. Sometimes things are just slow in the industry. If you’re facing a cash crunch, one of the best things you can do is get more accounts. Now, this may seem hard to do particularly if your industry is hit by a recession. However, it is possible. Your goal now is to look any and every where that you can to pick up extra accounts.
How you do this will depend on your business. Some methods that work well include:
- Asking for referrals;
- Calling past customers and inquiring about their needs;
- Go where your customers can be found.
Plan Ahead for Lean Times
At some point, every business faces a slow time. It might not last. Yet, when it hits, it feels like forever. You can escape the cash crunch by planning for it in advance. When business is booming, take part of your profits and set them aside. This money should only be used during times that business is down, and it should only be used for business related expenses.
Being proactive is your best defense against the cash crunch. Your entire business should be prepared. If you’ve been in business for a while, it’s not too late. You can assess your processes and make a plan to avoid future problems. Clients A.R.M. provides free process reviews for businesses. Contact us today to learn how easy it is to get started. There’s no obligation!
Locate the Cause of the Crunch
Cash crunches can also happen for specific causes not related to the economy. If your business has a cash flow issue, you have to locate the cause of it so that you can solve the problem. Things like high overhead, and not collecting on past due amounts are primary reasons why businesses struggle with cash flow. Struggling with collections? Clients A.R.M. can help. We have a 99% collection rate. Contact us today!
Whether or not a business should borrow money to get out of a cash crunch is hotly debated. It it’s a temporary issue, such as a seasonal fluctuation in business, borrowing funds might be a good solution. It’s important that you have a plan to pay back the funds that you’ve borrowed. Remember that the longer it goes unpaid, the more interest you will owe. If you miss payments, it can and will affect your credit.
Charge What You’re Worth
Often, new business owners have this idea that they should totally undercut everyone in their industry. Surely, that means they’ll have more clients than they can handle, right? Actually, no. There are a couple of problems with that idea. First, particularly if you’re dealing with businesses, many people believe that you get what you pay for. So, if your rate seems ridiculously low compared to your counterparts, your potential clients may disregard you as a choice without ever working with you.
Second, when you provide your services at a deeply discounted rate, you’re going to make it difficult to pay yourself a wage and to cover all of your business expenses…and make it hard for you to save any extra money for future cash crunches.
Charge what you’re worth. It’s fine to offer discounted rates. You should just make sure that you’re going to have a cushion (and a paycheck) each month.
Get Help With Your Collections
Earlier we mentioned that not collecting on past due accounts is one of the reasons why cash crunches take place. You can get help with your collections. It’s easier and more affordable than you think. Clients A.R.M. offers incredible rates for collections. We provide both first and third party collections services. Our 99% collection rate speaks for itself. If you’re struggling with collections, Clients A.R.M. can help. You can even place your accounts for collection through our website. Convenient. Affordable. Expertise. You need Clients A.R.M.