This archive report was first published on 7 August 2019.
Dealing with cash flow problems is a common challenge for entrepreneurs. Seasonal demands, low profits, excess stock, and giving customers too much credit can all contribute to this issue. According to an article by entrepreneur Eernesto Gonzalez published on Forbes on August 7, 2019, there are five strategies that business people can use to overcome cash flow problems.
Firstly, Gonzalez advises against issuing many cheques without a plan, as this can lead to financial difficulties. He suggests that entrepreneurs should be cautious when pushing money out the door.
Secondly, Gonzalez recommends choosing critical vendors, employees, and creditors and prioritizing payments to them. He says, “If you don’t have the money to pay everyone, you need to choose who you can pay. Once you are healthy, you can pay everyone else.” This may involve letting go of non-essential employees.
Thirdly, Gonzalez suggests coming up with a plan that allows you to keep enough cash to maintain operations. He emphasizes that this plan must show a win-win opportunity to suppliers, employees, and creditors, who want to know they will eventually get paid.
Fourthly, Gonzalez stresses the importance of maintaining trust with employees and suppliers during cash flow problems. This involves remaining committed to promises and being transparent about financial difficulties.
Finally, Gonzalez advises providing constant progress communication with vendors, employees, and creditors. He says, “If you are going to miss a payment, make sure you let them know upfront.”
