Business cash flow problems & solutions
Business cash flow problems don’t always result in insolvency. But if you’re regularly unable to make payments to your suppliers, landlord, HMRC and other creditors, this can be an early warning sign that you might soon be in an insolvent position.
If you’re concerned about business cash flow problems, then you’re right to start looking for professional help.
A licensed insolvency practitioner can step in from the very first signs of problems with your cash flow and show you how to solve them. We go into more detail about our services below. If you need urgent advice on your cash flow challenges or just want to talk through your situation with someone, please get in touch.
What causes cash flow problems – and how we can help
Our aim is to get to the source of your issues by getting a deeper understanding of your unique situation. But there are some common factors that cause business cash flow problems.
Invoice payment terms
Giving your customers a longer time to pay their invoices can be a great way to win their business. But if this is causing business cash flow problems, we recommend that you reduce the number of days in which they need to pay. Especially for customers who tend to pay late.
Poor cash flow forecasting
If you’re not skilled at accounts (and very few people are) then cash flow forecasting is a chore at best. It can be a confusing and time-consuming task that you could do without. However, to plan for your business’ future and avoid business cash flow problems, cash flow forecasting is a must. Download our step-by-step cash flow guide to get started.
Unnecessary stock or overheads
Investing in your business needs to be done in the right way at the right time. If you’ve over-stretched your company’s funds and are yet to see a return, this investment could be causing your cash flow issues. We can look at ways to lower your current costs while reducing the negative impact any cut-backs might have on your business.
Formal business debt solutions for cash flow challenges
For some business cash flow problems, we can approach your creditors on your behalf to negotiate new repayment terms that will work for both you and them. As part of this service we’ll look at changes you could make in your business to create more cash flow. You can see how this process works in our practical business rescue guide that can be followed anywhere – even your kitchen table. Download it here.
We can also use a legal tool to help with these creditor negotiations. For limited companies this is called a Company Voluntary Arrangement (CVA). If you’re a sole trader or partnership then it’s an Individual Voluntary Arrangement (IVA).
These tools essentially stop creditors from taking legal action against you while you create a plan to repay your debts and recover your business’ profitability. It’s a great solution if you have a potentially successful business but are being hampered by historic debt.
Letting your business cash flow problems go too long unchecked could result in serious complications. The worst case scenario could see you getting legal threats from creditors and even being issued with a winding up petition, which could end in the compulsory liquidation of your company.
The sooner you take action, the more likely it is that we can offer you a simple solution to your business cash flow problems.
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