Acknowledging problems with your cash flow is a skill often learned the hard way – that is, when issues have actually occurred. Not all snags are connected with the finances of the company, especially if you outsource accounting; indeed, some will be to do with other aspects of the business that can have a knock-on effect on the company.
Here are some potential problems you may spot:
Low staff morale
If you are experiencing problems with cash flow, you will most likely be tense around the workforce. This can have a negative impact on the employees, who may be affected by your mood. As a company becomes increasingly tense as it struggles to deal with cash flow problems, stress levels among staff are raised, problems are magnified and the company becomes an unpleasant place to work. This could result in the loss of staff, or tensions between employees and, ultimately, low productivity. Be on the lookout for tensions on the shop floor, and take steps to avoid an unpleasant work environment. For instance, you could introduce a reward system for those employees who go the extra mile.
Supplier relations
If you pay invoices late or even miss a payment due to cash flow difficulties, you may find that your relationship with your supplier may become tense. If you are no longer reliable for prompt payment, you will cause problems with your supplier’s cash flow. To ensure this doesn’t happen, make sure your clients pay you promptly so that you have money available. If problems do occur, deal with it promptly rather than ignoring the situation. Speaking to your supplier could provide a solution, even if it’s only temporary.
There are many difficulties that can occur with a business’ cash flow, but if you learn to spot this early, you may be able to take action before it becomes a real problem. For more advice on this, contact us today.
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