Business Finance 101: How Can You Get Out of a Cash Crunch Immediately?

 

The lack of profits and slow cash flow can bring about certain doom for any company. We have seen many corporations go belly up after they could not manage their cash flows on time. If you do not have a clear understanding of your business profits, you will have a tough time grabbing opportunities to expand. You can stretch your marketing resources to a maximum only when you know the sources of cash flow and the possible money leaks in your business. You may want to defend your operations by saying that your company is performing well in the marketing and sales department, and that is quite enough to show a positive cash flow. However, the collection of money from these sales operations is imperative.

If you are finding it hard to maintain a steady flow of profit even with the increase in sales rate, you need to accept that you may have a cash flow problem. You may even be staring at a possible cash leak. Here are seven questions that will help you to understand if your business is facing a cash problem immediately:

1. Are your budgets detailed and strictly followed?
2. Is your banker aware of the financial needs of your company?
3. Does your business have a standard operating procedure clearly spelled out?
4. Do you have a secure and updated accounting system for recording sales, purchases and profits?
5. Are you able to get the best prices for your employee services, materials, and supplies?
6. Do you have a way to measure labor output, technology and equipment productivity?
7. Do you have a standardized decision-making process?

If the answers to above seven questions is “no”, then it is not at all surprising that you are in the middle of a cash flow problem. The lack of monitoring and knowledge of pricing is the most prominent cause of all cash flow problems in business. You need to be prompt about record keeping and inventory updating to monitor your profits and expenses.

If you are feeling depressed and lost because you have just found out that you are having money troubles in business, yourself will feel much better knowing that you are not alone. Every small and large business has faced a cash crunch at some point. Almost 60% of all companies in the US face funding problems now and then. Many of them have turned to different sources of alternative finances to help them cruise through the rough times. After all, managing cash flow and making sure that you have the profit is quite easy. You need to make sure that you have money flowing into your business continually. The inflow should be more than the company expenses.

Sometimes, when you are facing a month of increased expenses and decreased sales, you may want an additional source of funds to see you through the hard times. However, in this world, nothing is free! Therefore, you should be very cautious about how you are getting the additional funding.

Here are a few examples of reliable funding methods many businesses have adopted to survive in the dog-eat-dog world:

1. Business debt consolidation –This is one of the best-known methods of refinancing your business. Debt consolidation means coalescing all your existing loans, small and big. You can apply for a loan that will be enough to pay off all your debts at one go. Now, you can try going to your bank for a consolidation loan, but remember, a bank will always check your credit score. Because you are applying for a consolidation loan, we can surely say that your credit score is not at its best health. In that case, you will have to choose from credit unions and online companies. Both of these can be very dicey for new entrepreneurs. You can face multiple hurdles including high APRs, low loan amounts, a big value of collaterals and short payment terms. To avoid these hassles, you can always visit Bay Area Title Loans. We have minimal paperwork, and we specialize in consolidation loans for SMBs. If you have a solid credit record, you can expect amicable interest rates and relaxed repayment terms.
   
2. Title loans –As the name suggests, this is when you transfer the title of your car or other vehicle(s) to the creditor for a fixed term in lieu of money. This kind of loan means risking your reputation, vehicle and money for a fixed amount. So unless you know about the lender, do not get into a title loan agreement. All title loan companies on your shortlist should have a reliable profile including testimonials, client reviews and ratings, just as Bay Area Title Loans has. Title loans also extend to equipment. For example, you can give the title papers of your Mac to us for a fixed sum of money. We hold the papers for you until your repayment term is complete. Applying for a title loan is easy as a breeze with us. You are asking for money that you already have, and we don’t see why there should be any unnecessary fuss about it.
3. Sell what you don’t need –Most businesses have a well-stocked inventory. In many cases, where companies deal with tangible items, it is easy to overcome a cash crunch temporarily by selling whatever you don’t need immediately. If there’s a Mac in the corner office no one uses, sell it! You can lease out unused office space or storage space for making some extra cash on the side. However, this is only a temporary solution. Unless you start monitoring your cash flow more closely and work out a way to make more profit, you will be back on the debt treadmill that you are dreading right now.

The 21st century has seen multiple businesses rise, and has seen much more vanish into oblivion. The healthy management of finances dictates which way the scales will tip for a business fresh out of the think tanks. Bay Area Title Loans is always there for giving business geniuses and their dreams a kick-start, and to lend you a helping hand in case you need one. Visit https://bayareatitleloans.com/ for more information!