Six Tips for Small Businesses to Wipe off a Cash Crunch

7 min read
developing small business

How to cope with sizeable cash flow problems

One of the most important challenges encountered by a developing small business is the aspect of how to balance growth against profitability. Although there are distinct fundamental differences between profitability and cash flow, nearly everywhere the main practical constraint to the business growth is cash and this especially holds good for small businesses that often have their capital funding done by their founders.

If you find yourself getting embroiled in a major cash flow setback, relax a bit as everything is still not lost. Most importantly, you can look up to the accountant directory to search for and consult with an accountant near you, who can offer professional expertise and come to your rescue with valuable suggestions.

Here are six feasible and realistic tips to plain-sail you through the difficult times for small businesses.

developing small business

#1. Aggressively collect the payments from your trade debtors

Almost all businesses owe money from their customers. However, most customers refrain from paying up at the right time. It’s pretty simple for them to disregard the paper invoice. Therefore, it’s imperative to personally call your borrowers and try to recover the payment on the telephone by availing a service like Sagepay. Alternatively, you can send an electronic invoice that supports instant settlement through PayPal.

#2. Defer the payment to your trade creditors

You can delay the payment of your bills to the lenders. This releases the working capital appreciably. Often suppliers show flexibility while receiving their dues somewhat later than anticipated. If your business premise is on a lease, you can request the landlord to change over from quarterly to monthly rent agreement that will discharge an average of a month and half’s rent.

#3. Ask extra time for paying your VAT bill

Irrespective of the business size, the quarterly payment of VAT bill causes a significant depletion in the company’s cash balance. Provided that you regularly pay your VAT bills in time, you can contact HMRC and put a request for an extension. Get this concurred in advance to evade a penalty and surcharge.

#4. Acquire a bank overdraft

Although banks aren’t always that flexible or speedy in their executions, a benevolent bank supervisor may consent to an interim assistance with an overdraft on a short-term basis, as long as the requirement is moderate and your account has a clean record.

#5. Ask your friends and family to give you a loan

When banks flunk, it’s the final convenient option for any small business. Paying the interest and documenting a proper loan agreement is a great way to show that you treat it as an investment and not a gift.

#6. Set up an invoice discounting or debt factoring agreement

Both the techniques include pitching your overdue invoices to a third party in return for an immediate remittance. In invoice discounting, you lend against the customer’s unpaid bills. You repay once the customer pays back. In debt factoring, you involve the outsider to handle your sales ledger. The customers here get to know about your financing unlike the former where you can maintain secrecy from your customers.


There’s no disgrace in running somewhat low on money. Sometimes customers avoid timely payments. Even initially marketing campaigns cost loads and take time to garner profits. What’s most vital is to visit Google and type accounting firms near me from where you can review, choose and contact to seek help and guidance.

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