It seems as though trillions of dollars are constantly flowing out of Washington to support small businesses through government-imposed shutdown fallout. That aid money is targeted at a massive problem most open companies are facing today. A severe lack of cash.
5 Business Tips for Handling a Cash Deficit
Cash makes the world go around for businesses as it’s necessary to pay employees, vendors, rent, and more. So then, how can a business survive if the month is coming up and there’s no cash to be had?
There are several cash deficit strategies savvy entrepreneurs can lean on to vastly improve their economic situations, at least in the short-term. Below, our team breaks down 5 of our favorites you should keep reading to discover!
1. Take On a Loan
A lot of the money that’s being earmarked by the federal government to help businesses is coming in the way of low-interest loans. These loans can be claimed through your local bank or the SBA.
You may be surprised by the extent to which these loans help businesses of all sizes so if you haven’t considered applying yet, make doing so a priority as loan dollars could immediately solve your cash deficit issues.
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2. Change Your Pay Periods
Do you pay your employees every week? If you do, you’re creating unnecessary cash flow issues.
Switching your pay periods to bi-weekly or monthly will allow you to hold onto cash for longer which you can collect interest on and use to take care of whatever expenses your business incurs over the course of thirty days.
3. Renegotiate Your Partner Terms
Whether it’s loans or deals with vendors, chances are, if you call them up and threaten to cancel if they don’t negotiate with you, they’ll negotiate.
We’ve seen people drop their interest rates significantly on loans or cut the prices of their supplies by 10%+ with just a 30-minute call. Why not try to do that same?
4. Try Factoring
A lot of small business’ cash deficit issues stem from having too many unpaid invoices. An easy way to get those invoices cashed in while you’re waiting for your clients to pay is to use invoice financing or “factoring”.
You can click here to learn more about this process – but simply put, when you send out an invoice to a client, you can send a copy of that invoice to your factoring company and that company will then pay out your invoice, less a fee.
5. Take a Pay Cut
While not always comfortable, sometimes, taking a pay cut is a necessity to keep cash flow problems at bay.
Can you afford to cut down on your salary? If you can, invest in your financial survival by doing so before making your employees shoulder your cash woes.
Being in a Cash Deficit Is Uncomfortable but Not Insurmountable
A business that’s in a cash deficit is likely fighting to stay alive. If you’re in that position, we hope our tips have helped add clarity to what you can do to improve your financial life.
If you’d like more tips, explore the newest content on our blog!
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