Common Cash Flow Problems And What To Do About Them

Common Cash Flow Problems And What To Do About Them

Cash flow isn’t sales or revenue, but the money that flows in and out that keeps a business alive. A common fear for entrepreneurs is running low on cash.

Check out these tips on how to recognize issues and maintain healthy cash flow today!

Cash flow can be a common problem for businesses for a variety of reasons. The good news is that there are as many solutions available once you’ve identified the main issues.

Problem: Customer Payment Delays

Are customers not paying before your bills come due? Try these tips!


  • Get paid upfront, or partially paid with a deposit. If deposits aren’t possible, consider offering a discount for early payment.
  • Send an invoice (email, if possible) the day you do the work or ship the product. Delays in sending out invoices hurt cash flow and indicate that your billing process may need to be adjusted.
  • Ask for credit information on new customers or run a credit check yourself before the sale.
  • Receiving payments and depositing funds may seem like a no-brainer, but the process you set up will help cash keep flowing!

Problem: Not Enough Safety Net Cash on Hand

Are you worried that you will run out of cash when payroll is due or supplies are needed? Some of these options might help!


  • Take a look at the payment due days offered by your vendors and renegotiate to extend if possible.
  • Consider establishing a credit line that you can use in times of emergency to prop up your business until customer payments are received (Be careful! Using a credit line should be done with discipline and a repayment plan in mind).
  • Keeping your accounting system updated daily is the best way to make smart decisions. If this isn’t the case, make changes.
  • You have to know your numbers to make good decisions, so plan ahead for bumps in the road and how your business will handle them.

Problem: Too Much Money Tied Up in Inventory

Do you track how long it takes to sell inventory? If not, you may want to start.


  • Take a look at the process used to forecast inventory needs. Is it working properly? If not, can it be improved? Maybe a Point of Sale system? Or better organization or better tracking procedures? If your numbers aren’t right, the decisions you make based on them won’t be right either.
  • Close the gap on the time inventory sits on the floor. Work with vendors to shorten order times and carry less inventory in-house. Then order on a “just in time” basis as you receive orders from your customers.
  • If products in inventory are being carried that don’t sell – get rid of them! Hold a clearance sale to turn it into cash! Check with customers who purchased these items in the past and get rid of them. Use the cash and space to carry products that sell quickly.
  • Inventory equals cash. Letting inventory gather dust means it isn’t available as cash to spend.

Problem: Too Much Spent on Overhead

Is overhead eating up your profit? Review expenses regularly to see where you can improve.


  • Monitor expenses carefully by category and recognize where changes need to happen. Tackle the most significant concern first and then move on to the next one.
  • Without taking on more roles yourself, are there areas where you can automate the process instead of hiring more employees? Payroll is typically one of the greatest strains on cash flow. Using caution when adding staff is critical to controlling overhead.
  • Map out a plan for spending for the year and stick to it. Not budgeting for advertising and marketing expenses is prone to overspending. You indeed have to spend money to make money, but that spending should be planned for and not done impulsively.
  • When revenue is flowing in, it can seem like a time to spend. But careful planning will keep you on track when conditions change.

Cash Flow Control

Remember that a business can be making a profit and still have serious problems if cash flow isn’t managed properly. Use these tips to get your cash flow under control, and call Sheles Wallace for more help. Sheles will dive into the details and help you make the right decisions to keep your business on track.

About the author, Sheles Wallace

Sheles is an award-winning business coach who gets results for her clients.

For over 15 years, she has helped business owners achieve their goals and

take their businesses to the next level. If you're ready to take the next

step in your business evolution and go from an owner who wears all hats to

creating a commercial, profitable enterprise that runs without you, find out

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