When a business is facing issues with cash flow and high debt, it is a stressful situation. This is the point where some companies will buckle under the pressure and fall into liquidation. However, there might be some things that you can do as a company to avoid going into liquidation. If you play your cards right, you can ride out your difficulties and come out stronger on the other side. Principle Insolvency is here to talk about how a company can face cash flow difficulties with confidence.
Tips to Help Companies Facing Cash Flow Difficulties
There are several things that can be done when a company is facing cash flow difficulties.
– Debt Management: If you are facing cash flow problems within your company, debt management is something that needs to be explored. There are a couple of ways that you can do this. The first one is to work with creditors to negotiate terms. Many creditors want to work with you to come up with a solution to the issues you’re facing. Another thing that can be done is debt restructuring. This can help extend repayment periods, reduce interest rates, and convert debt into equity.
– Inventory Control: Sometimes, the problem lies in your inventory. If this is the case, it’s time to make some changes. Make sure you are optimizing inventory levels. This means avoiding overstocking and can help to free up cash. This can also help to reduce storage costs. You can also decide to move to Just In Time (JIT) inventory. This means that you only order exactly what you need so that you don’t have to store or tie up a bunch of your company cash in inventory.
– Invoice Management: If you have customers that owe you money, you can speed up the collection process. Have stricter policies on payments to help speed up collection of receivables. Make sure you are issuing your invoices in a timely manner as well to give yourself the best chance at getting the money that is owed to you.
– Cost Reduction: Take a close look at your expenses. Cut what you can. If you have a bunch of non-essential costs, it’s time to cut them to save your company. Turn your focus to maintaining expenditures that will help contribute to revenue generation.
– Increase Revenue: This might seem like a no-brainer, but you need to increase revenue as soon as possible. This can be done by diversifying your income streams through exploring new markets, products, and even services to increase revenue. This is also a good time to boost your marketing efforts to find new customers and appeal to more people.
Insolvency Services in Auckland, Hamilton, Levin & New Zealand Wide
If your company is struggling with cash flor problems and are at risk of insolvency, you can turn to Principle Insolvency to help you navigate the best course of action. We will help you understand your options and choose the best direction for your company. Call us today!