{"id":2652,"date":"2020-03-23T08:00:40","date_gmt":"2020-03-23T13:00:40","guid":{"rendered":"https:\/\/www.headwaycapital.com\/blog\/?p=2652"},"modified":"2021-11-19T00:31:20","modified_gmt":"2021-11-19T06:31:20","slug":"small-business-recover-negative-cash-flow","status":"publish","type":"post","link":"https:\/\/www.headwaycapital.com\/blog\/small-business-recover-negative-cash-flow\/","title":{"rendered":"How Can a Small Business Recover From Negative Cash Flow?"},"content":{"rendered":"

Cash flow issues might happen every so often in a small business environment, but they\u2019re not always a sign that you\u2019re in danger. Sometimes, an unplanned repair or slow month can cause your operating expenses to exceed your income in that period. Or, maybe you had a client that paid late and backed up your finances. However, if you frequently<\/em> experience a very low or negative cash flow, it\u2019s a good idea to seriously review your processes and adapt your business<\/strong>.<\/p>\n

Without a liquid reserve or quick and easy access to working capital<\/a>, a cash flow shortage can lead to major issues for small businesses. If you need to turn things around, here are some strategies you can use to recover from a negative cash flow now<\/a>.<\/p>\n

 <\/p>\n

1. Trim Expenses<\/strong><\/h2>\n

When you\u2019re short on cash, the first thing to look at is your business budget. Even in a small business setting, there\u2019s probably something you can cut down on or eliminate from your expenses. Making small changes, like turning your computers off at night or switching to energy-efficient fixtures, can lead to real cost savings down the line.<\/p>\n

As a small business owner, some of your biggest expenses are likely labor or rent. Strategic scheduling, like remote-flexible positions or need-based staffing, can help you save a significant amount on office expenses and space. Similarly, contract-based employment<\/a> models are another way to lower backend expenses since you\u2019re not paying for things like employee taxes.<\/p>\n

 <\/p>\n

2. Update Your Payment Terms<\/strong><\/h2>\n

It may be hard to avoid cash flow issues if your payment terms are lenient or too far out. Always make sure to issue invoices immediately, and if possible, tighten your payment terms to help bring money in sooner. You may also be able to negotiate more favorable payment terms with your commercial vendors or partners, particularly if you maintain a good working relationship.<\/p>\n

 <\/p>\n

3. Closely Monitor Your Inventory<\/strong><\/h2>\n

It\u2019s tempting to keep a large supply of inventory on hand, but old, unused or unsellable product can be a liability for your company rather than an asset. Instead, fine-tune your storage and order fulfillment workflow. For advanced needs, look for an inventory management software platform that integrates directly with your accounting software to make your system more efficient.<\/p>\n

<\/h2>\n

4. Utilize Clearance Sales and Bundling Tactics<\/strong><\/h2>\n

Clearance and end-of-season sales can help you quickly eliminate older products and bring in more cash. Make sure to advertise your event and tell customers about it in person. You could also strategically bundle relevant products together to help boost sales and move stock, like a welcome package with additional accessories (sold at a higher price point) to entice new customers.<\/p>\n

 <\/p>\n

5. Evaluate Your Pricing<\/strong><\/h2>\n

Look to your competitors; are your prices in line with similar businesses in your field and in your area? If you\u2019re not offering a competitive price, prospective customers will likely shop elsewhere. But before you adjust your fee schedule, make sure to review your cost per unit or cost of revenue to make sure a price adjustment wouldn\u2019t further complicate your cash flow issues.<\/p>\n

 <\/p>\n

6. Look to Business Financing<\/strong><\/h2>\n

There still may be times that you need additional funds to cover emergency expenses or a negative cash flow. Instead of letting your business suffer, secure a form of financing now. Revolving credit, like a business line of credit<\/a>, is ideal for entrepreneurs because you can borrow just what you need, when you need it.<\/p>\n","protected":false},"excerpt":{"rendered":"

Cash flow issues might happen every so often in a small business environment, but they\u2019re not always a sign that …<\/p>\n","protected":false},"author":16,"featured_media":2653,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[609],"tags":[534,539],"class_list":["post-2652","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-small-business-finance","tag-cash-flow","tag-small-business-cash-flow"],"yoast_head":"\nHow Can a Small Business Recover From Negative Cash Flow? - Headway Capital Blog<\/title>\n<meta name=\"description\" content=\"Need to turn your cash flow around? 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