If you’re having cash flow problems then you’ll know that paying your bills on time is hard. But that’s not the only cost of poor cash flow. Jordan MacAvoy, vice president of Marketing at Fundbox, explores some other costly side effects of poor cash flow and offers tips for fixing them…
Cash flow is king, right? It’s business finance 101. When cash doesn’t flow into your business you can’t pay your bills, employees or make investments to help move your business forward. Or you make those payments and are left in the red.
It’s a crisis situation that no small business wants to face. Yet, many do. Statistics vary, but somewhere in the region of 60% of small businesses deal with cash flow problems each year, while 80-90% of businesses that close their doors do so because of cash flow issues.
Now that’s the worst-case scenario. But periodic cash flow problems can impact all areas of your business. Even if your cash flow forecast points to better times ahead, the consequences of a cash flow negative situation at any time can be far-reaching.
Aside from not being able to make rent or payroll on time, here are just some of the other costs of poor cash flow.
Your Credit Score Suffers
While we’ve come a long way, and companies like Fundbox are looking beyond credit scores, many companies still use this a primary way of assessing your business. If cash flow challenges cause you to not pay your bills on time or miss credit card payments, your personal and business credit scores will suffer