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Spotting and Avoiding Cashflow Problems

The way to avoid cashflow problems is to plan ahead and to arrange alternative sources of business finance in case they are needed.

A business without cash is a business without a future. When there is no money in the bank employees and urgent bills cannot be paid, bringing operations to a halt and creating a spiral leading to business failure.

Even profitable businesses can find themselves without cash in the bank. However, this situation can usually be avoided with planning and with recognition of the warning signs.

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How To Spot Cashflow Problems

  • Drop in turnover — Reduced sales means lower cash receipts. This could be a seasonal fluctuation or an indication of a more serious problem.
  • Customers taking longer to pay — Giving extended credit to customers, intentional or otherwise, reduces the amount of cash on hand to make payments to suppliers.
  • Paying creditors more slowly — Being forced to slow the rate of payment to suppliers and other creditors is a sign that there is less money to hand.
  • Incurring late payment penalties — Delays in paying lump sums to HMRC for VAT and PAYE will result in penalties; if this is happening more frequently it suggests there could be a cash flow problem.
  • Increased pressure at month end — The payroll is the single largest payment many organisations make each month and puts the greatest pressure on cash. If it is becoming harder to ensure that funds are available each month, the working capital of the business is probably being stretched very thin.
  • Calls from creditors are increasing — As payment schedules are stretched, creditors will become nervous and begin calling in more often. A rise in telephone and email traffic is another sign that there could be a problem.

All of these indicators can be tracked by business managers using key performance indicators. Careful and consistent monitoring should ensure that warning signs of an impending cashflow difficultly are picked up while there is still time to act.

Cash Flow Solutions From Touch Financial

If you are concerned about the impact of cashflow problems on your organisation, get in touch with us.

We have assisted thousands of UK organisations looking for ways to increase their working capital. Our free recommendation service gives you access to our experienced advisors who will take the time to understand your needs. With this information they can recommend the finance options that are best suited to your situation.

As the UK’s leading commercial credit broker we work with a carefully chosen panel of lenders from whom we can often obtain Competitive rates.

We offer impartial and independent guidance. Our service costs you nothing because our fees are paid by the funders and we are structured in such a way that our advisors focus entirely on finding the best options for your needs.

If you are concerned about cashflow issues why not invest just a few moments of your time to see how we can help you? Give us a call today.

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"Very polite and a professional team of financial advisers who seem to know their business, work well within their industry and get a result."-Invoice Finance Introduction

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