Many small businesses fail within the first five years of operation and even more fail in the first 10. Up to 80% of those cases involve problems with managing cash flow.
The good news is that you can nix these cash flow problems and keep them from putting your startup out of business with the right financial strategies. Consider the following common cash flow pitfalls and how you can avoid them.
Overspending too soon
Entrepreneurs often use their own money to get their startup up and running. This makes it crucial not to overspend early on. Impulse purchases can easily break your business before it even goes anywhere.
You need to be able to differentiate between vendors and service providers that you need and those you don’t. Make a detailed budget and stick to it at all costs.
Past-due passivity
Cash flow is crucial to your success as a business. Of course, every business has peaks and valleys but too many valleys create a cash flow sinkhole called debt that you can’t escape from. That’s why unpaid client invoices are one of the biggest cash flow killers.
To avoid this from happening, consider using business factoring companies. Invoice funding ensures that your cash flow is steady and you always receive your capital when you need it. Just be sure that you’re active about your invoice due dates. Lay out the consequences of late invoices to your clients and don’t let them roll over you.
Poor bookkeeping
Bookkeeping often gets pushed aside by many small businesses in favor of other priorities that need to get in order. But poor bookkeeping opens the door for a lot of issues including legal problems and cash flow issues.
Make sure that you’re staying up to date with your accounting system from the get-go. Bookkeeping might not seem like a major priority at first, but it is.
Are business factoring companies the right choice for me?
There are about 5.9 million commercial motor vehicle drivers operating in the U.S., according to the Federal Motor Carrier Safety Administration. These drivers are an important part of your transportation business, which means it’s vital that you meet payroll on time. That can be difficult if you’re having issues with cash flow.
This is where we come in. Business factoring companies like ours offer transportation companies and other businesses the ability to use invoice factoring to fill in the gaps that happen when you’re waiting on money from clients.
Business factoring makes accounts receivable financing easier and keeps you out of debt. To learn more about our small business invoice factoring services and why invoice advance loans are a great option for your company, contact us today.