For most businesses, their financial stability relies on a steady flow of invoiced sales that result in good cash flow. But if the cash flow is stalled, then the end result could be a series of problems that a small business owner may not be able to handle.
While the average business owner appreciates the importance of good cash flow, that significance is amplified when the cash flow slows down. It is not until a slow economy settles in that most entrepreneurs truly appreciate the ability to maintain essential business functions and retain their staff. There are several elements to a business that get disrupted when the cash flow slows down, and some of those elements are hard to re-start when the economy picks back up again.
Probably the most significant issue that comes up during a slow economy is payroll. Most companies fund their payroll through the revenue collected from invoiced sales. But when past due invoices start to outnumber the paid invoices, the cash flow to fund payroll is no longer there. In a slow economy, everyone is having problems paying their bills on time. The issue for your company is that the slow paying habits of your customers tend to have a long-standing effect on your personnel.
The concept of past due invoices is something that has a ripple effect on the entire business community. When your customers do not pay you, then you are unable to pay your vendors. When you look at it from the perspective of being a customer, it allows you to have a little more empathy for the clients that are holding up your cash flow. But the fact is that you have vendor bills to pay and you want to preserve your company's credit score. Without a reliable cash flow, you will be unable to pay your important bills.
One of the things that business owners never think about when a slow economy settles in is the difficulty in being able to pay those critical insurance premiums that keep their company protected and operating. Health, liability and lost income insurance are just some of the premiums that you pay every month for coverage that your company needs. If your liability insurance lapses, then you could be open to lawsuits that could ruin your company. Without the proper kind of cash flow, you are unable to maintain your insurance premiums and that can have a seriously negative effect on your business.
What would your company do if the utility company suddenly turned off your power? What if you were evicted from your office space because you could not pay the lease every month? Once again, these ongoing payments are easy to take for granted when the cash flow exists to take care of them. But when the economy slows down, it becomes harder and harder to make these payments. Business owners suddenly find themselves stuck in a situation where they have to create a priority list of ongoing expenses that could bring their business to its knees. But it does not need to be that way.
When you break down your company's issues, you realize quickly that the real problem is not that business is down. A look at your aging report tells you that the invoiced sales you are generating should be more than enough to cover your ongoing expenses. The thing that prevents you from maintaining business cash flow in a slow economy is past due invoices. When your customers pay late, they slow your cash flow to the point where you never have the money you need to meet your obligations. The solution is to get involved with a reliable cash flow lenders like accounts receivable finance companies that can turn those invoices into assets.
1st Commercial Credit has spent years developing a reputation as the world leader in accounts receivable financing for small sized businesses. What we do is turn your legitimate invoices to creditworthy clients into collateral that is used as working capital directly into your company's bank account. The process we use is proven and the results we have created speak for themselves.
Maintaining a reliable cash flow in a slow economy is a struggle for most business owners. Contact 1st Commercial Credit right now and let us show you how easy it is to turn those outstanding invoices into assets. We will set up an accounts receivables financing program for your company that enhances your company's financial strengths, and compensates for the weaknesses. This is your solution for maintaining a strong cash flow in a slow economy, while your competition wonders how they will survive from month to month.