Running out of money is a very real possibility that can happen for businesses of any size or industry. Recovering from this is much more difficult and it is important you consider all the options that are available if your business does start to run out of money.
Coleman & Co support every business throughout Lisburn and the Northern Ireland area. If you are encountering financial issues, our accounting services can get you back on track.
Cut Cash Expenses
Although there are several steps to take when running out of money, your first priority should be to cut your cash expenses. By doing this, you immediately reduce some of the costs your business has and prevent your total profit getting even lower than what it already is. There are several costs you cut which include:
- Cutting Staff
- Negotiating Suppliers & Resources
None of these options are particularly fun but may be necessary to give yourself the break you need to get back on track. For many businesses, cutting back on the number of luxury items you have within your business can make a big difference and help you significantly lower costs. Make sure not to invest too much into items the business doesn’t actually need.
Non-essential assets could even be sold to raise some revenue at the same time cutting your fixed and running costs.
Quick Payments & Invoices
Many businesses will take payments immediately after the point of sale. However, if you give customers plenty of payment time, it could be working against you when it comes to profit.
By making sure invoices are sent out as early as possible, you are still giving customers a good amount of time to make their payments. Instead of giving freedom to pay when they want, perhaps set a deadline on the payments. You can then make transactions much sooner and receive payment without delay.
Small Business Loans
The most important thing to do is make sure you are not left in debt. If you have a financial plan for the future and you know cash flow will soon pick up, getting a loan should not be much of a risk. Whether this is just to give you a financial boost and a bit more spending power or you just want slightly extra cash to pay suppliers or staff, a loan could be a good option.
As long as this is correct, you will be left in a much better financial position. Using finances to continue reinvesting into a failing project or to purchase unnecessary items could leave you with bigger financial debts and liabilities. Make sure that if you do choose a loan, you have a good plan of where the money will go. This prevents having further payments that you cannot pay.
Maintain Communication & Seek Advice
The worst thing to do is to cover up the cracks until the whole thing blows up. By maintaining good communication with directors, stakeholders, creditors and any investors, your business stays in a good situation. Ultimately, improving financial performance is a project you can actually achieve with this approach.
Without good communication and honesty, it could cast a doubtful eye over your business. This may lead to damaging the trust between you and other stakeholders. Along with communication, seeking good advice from professionals can be a useful option. Accountants will help you manage and improve financial performance. Additionally, they will also have ideas on how to raise revenue for a business running out of money.
If your business is struggling financially or you want advice to create a financial plan and help your business flourish, speak to Coleman & Co. Call us on 028 9266 3599 or fill in our contact form to make an enquiry. You will receive a fast response from our team throughout Lisburn and Northern Ireland. Consultation and accountancy services are available whenever you require.