Cash Flow
Cash Flow

What Cash Flow Challenges Small Business Entrepreneurs Face

Cash flow is blood line of every business. All types of ventures require a steady and continuous source of income and cash in hand to meet every day bills and make payroll. Unfortunately many business owners face issues with cash flow which isn’t in their control but important to deal with several factors that hampers the flow. A survey on several small business owners helped in framing out the factors which are responsible for cash flow challenges. The majority of them talked about the financial implications on their ventures are consequential.


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Apart from monetary issues, more than 50% agreed with the emotional imbalance is a result of cash flow troubles while more than 40% cited how it affects administrative processes.

The survey concentrated on cash flow issues due to payment problems.

Below are some of the common payment challenges which many small business owners face :

1. Receivables management

If you are not acquainted with the term ‘Receivable’, is a balance of money due to the ventures. The client or customer owes a payment to the organization for the taken services. They are also known as outstanding receivables until the client pays the receivables in full.

If US is taken into consideration, one-third of the small business owners have an estimated of more $15,000 in outstanding receivables while for small business owners provides an average outstanding receivables of around $52,000.

2. Payments management

How do small business owners control the payments? According to a survey, more than 50% revealed they send out invoices to the customers or clients which bill for the services rendered on a particular date. And around 47% of small business owners have adopted advanced payment method. It helps entrepreneurs to charge for the services provided to the customers and/or clients either before or right when they do.

It takes long for the money to process for small ventures than anyone can think. More than 60% of small business owners explained of late processing of amount on their company’s cash flow after getting the payments. Nearly one-third of entrepreneurs revealed it takes more than 30 days for receiving payments.

3. Taking care of employees

It is not only about the company who gets affected due to late receivables but employees as well. Due to lack of readily available finance, it is difficult for small business owners to pay employees on their payroll. Majority of small business entrepreneurs with cash flow issues are unable to pay employees on the assigned payday.

As entrepreneurs cannot pay on time, employees start looking for the opportunity at companies that provides dependable pay on time.

4. Getting capital

Imagine a situation when it is difficult to have liquid finances available immediately? This in turn results in companies to start looking for funds and other forms of capital for supporting their ventures financially. Access to financial support is not easy to get and some business owners consider it as a defeat before they can give a last attempt. About 2 in 5 of small business entrepreneurs in States do not apply for funds while 25% say interest rates are quite high and more than 20% do not look forward to make payments while 15% think their application won’t get approved.

How to resolve cash flow challenges?

Follow the below mentioned tips which are helpful in getting a hold on cash flow:

  • It is recommended in monitor the cash flow on weekly basis. The best method to keep a track is via using accounting software.
  • It is advised to prepare and send invoice to customers as soon as possible. Do not wait till the end of the month and send them the bill once the product is delivered or service is provided.
  • It is important to follow up on the invoices promptly. The benefit of using accounting or invoicing software is that they automatically follow up with customers and update the record.
  • The need of the hour for small business owners is to go online. Carry out your transactions online instead of visiting the bank daily or weekly for depositing cash or checks.

Priyanka Dwivedi is Editor-in-Chief at Fundlime. Specializing in financial advice for small business owners. Beyond her deep knowledge of small business loan and tips, she would love to help match your business with the best loan option that benefits you most!

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