Cash Flow Problems

Cash Flow Problems and Solutions

Positive cash flow is at the core of any successful business, because no matter how profitable a business might be, if it is experiencing cash flow problems then the business has a problem. If your business is experiencing cash flow issues the first thing to do is understand the causes so that a solution can be found.

Cash flow difficulties can stem from a variety of issues as well as a combination of circumstances. The most common causes and effects of cash flow problems are:

If one or more of these are causing your business cash flow difficulties, scroll down for more detail. The sooner you contact us or call us on 0333 222 8065 the quicker we help.

Demand from Creditors for Payment

Cash flow problems do not necessarily mean a business is insolvent, but if not dealt with, the situation can deteriorate quite quickly towards insolvency and become a real threat to the viability of a business. If a business is unable to pay its own creditors, due to a cash flow problem, the situation can quickly be made worse with supplies and credit being withdrawn and even the threat of recovery proceedings.

Creditors do not simply include suppliers. Also included are HMRC, Banks, Funders and other Finance Providers and Landlords. We have dedicated a whole section to this issue of demands for payment from creditors and the services supplied by Poppleton and Appleby, which you can reach by clicking here.

If your business is experiencing cash flow problems due to demands from your creditors for payment, contact us or call us on 0333 222 8065 for help and advice.

Bad Debts and Cash Flow Problems

The effect of a key customer becoming insolvent and not paying its debt to your business can have a serious impact on its cash flow and prospects. As a result, your business will be left with wide ranging problems from such bad debts, including:

  • An immediate cash flow problems because the expected payment will no longer be there
  • Reduced turnover going forward, especially if the customer was a significant proportion of your output
  • Internal resources no longer working to capacity forcing a reduction in overheads or the need to secure replacement turnover

If your business is experiencing cash flow problems due to bad debts, contact us or call us on 0333 222 8065 for help and advice.

Difficulties collecting the money due to you

Vital funds can be trapped in debtors who are not paying you on time, causing a cash flow problem. At the same time, your business’s own creditors will be pushing you to pay their bills and are not interested in the reasons why you don’t have the cash flow available to pay them on time. So it is important for you to understand why your customers are not paying on time so that you can find a solution to your cash flow problems.

At Business Recovery Specialists, we can help by:

  • Establishing the solvency of your customer and the reasons why payments are being withheld or delayed
  • Implementing effective debt collection – we can take these problems from you and deal with them whilst you focus on running the rest of your business
  • Minimising disputes by reviewing your internal systems to ensure there are no unwarranted reasons for payments to be withheld.Whether it is simply supply of components or services or the more complex issues arising out of construction and contract debt, we have the specialists to help
  • Recommending and implementing debt insurance

If your business is having difficulties collecting the money it is owed, and this is causing cash flow problems, contact us or call us on 0333 222 8065 for help and advice.

Your Trading Profit Forecasts may be Flawed

It may simply be that you are not making the profits you had forecast and the problem is starting to manifest itself with cash flow problems. Sometimes, it needs an independent review from someone “outside your business” to look at the business model and identify where profits are or are not being made.

Quite often we sit with business owners who have lost focus on their original core business, and have diversified to increase turnover, with the unexpected outcome of reduced levels of performance. In our experience, it is surprising how often the conclusion is reached that a business can be more profitable by doing less! Improved profits quickly translate into better cash flow.

Our team of Business Recovery Specialists have worked with a diverse range of businesses across many different sectors when it comes to identifying and finding solutions to cash flow problems. We do this by working with you closely to identify those issues which may not be immediately apparent before recommending a strategy to return cash flow and profitability to your business.

If your business is experiencing cash flow problems as a result of inaccurate or unrealistic trading and profit forecasts, contact us or call us on 0333 222 8065 for an initial discussion of how we could help.

Funding and Finance issues can lead to Cash Flow problems

All businesses need a degree of working capital. Quite often that is in the form of finance from a bank or other finance provider. However, businesses evolve and change and cash flow problems occur when the finance is no longer suitable or sufficient. Common problems we see are:

  • Withdrawal of finance by a bank or other provider with insufficient notice to arrange alternative finance.
  • Businesses outgrowing factoring or invoice finance arrangements with cash being trapped that cannot be drawn down.
  • Insufficient working capital to fund current levels of operation.
  • Business owners having to find their own funds from savings, pensions or re-mortgaging their house to prop up their business.

How we can help solve your cash flow problems

We can provide business owners suffering from cash flow problems with options, guidance and solutions in funding and finance when the situation is difficult or even where all hope seems to have gone. For more information on how we can help, contact us or call us on 0333 222 8065.