Inconsistent cash flow is the biggest conundrum that startups cope with. A survey conducted by Institute for Business Value and Oxford Economics stated that ninety per cent of Indian startups fail to keep their business afloat in the initial five years. Owing to which, the startup companies meet their doom before completing five years. Innovation, disintegrated workforce and inadequate productare some reasons that beget a companys shutdown. Other than these problems, cash flow is the major conundrum which directly or indirectly leads to the closure.
In the recent times, a majority of millennials has founded companies envisioning to earn larger profits. Just Buy Live, Baby berry, Monkeybox, Wydr and Ezytruk are some of the Indian startups which cannot stand the test of the time and eventually, closed down.
Young minds commonly perceive that exploring an untapped market and funding the business from personal saving is sufficient to run the company. However, being devoid of know-how, you will require to go an extra mile to administer the business. You need to ascertain the business methods to avert your business from losing the cash flow.
Effective ways to avert the cash flow crunch
Survival is immensely imperative for every business. For stability, the company requires to have a constant cash flow and in-flow of large funds. This, in turn, facilitates in expanding the business and building future prospects. Further, learning new business strategies also turn helpful for entrepreneurs as these tactics assist them to run the business better.
1. Make transactions easier and faster
Its time to cope with the digitalized era and adopt new means to keep your company ahead. So, after fortifying relationship with the clients you should openly confer the payment policy and state aftermath in case payment gets delayed. Further, you should increase modes of payments; for that, you should add on digital payment modes such as credit cards, debit cards, net banking and other online payments.
Other than introducing digital payment modes, you should entice customers to make online transactions as it will avert a cash flow crunch. Primarily, use of the credit cards warrants a steady cash flow from the customers.
2. Organize the front desk and procure invoice system
While handling a small business, it is imperative to manage the paperwork and especially, the front desk of the office. In essence, front desk is the primary place that catches outsiders attention and even, its the very place wherein all bills, whether small or high, are kept. Thus, the business owner should ensure that the front desk is well organized and tidy.
Another tip for an emerging business is to procure an invoice system. As the business increases, the customers also soar and thus, it becomes difficult to remember payments that are due. By installing the invoice system, it becomes easier to recognize the customers which dont make timely payments. The software gives instant reminders to the admin when the payments are undone on the due date. Later, the company can contact the customers and inquire reasons for the payment delay. Thus, install the invoice system faster and ease your troubles.
3. Introduce Fast cash
By introducing fast cash norms in the business, you can easily avoid cash flow crunches. At present, two fast cash policies are prevailing in the business that is, Net 15 and cash discounts. In Net 15, it becomes mandatory for the customers to pay the full amount within a fortnight. While the other convention entices customers to pay sooner and in lieu, they receive discounts on the cash payment.
Follow these business strategies in your venture and avoid cash flow crunches.