Entrepreneurs consider cash to be the lifeline of their business. Many of them may be operating lucrative organizations in the market. These proprietors may even be anticipating high profits in the coming months because of a surge in sales. However, in the interim period, they may be witnessing a severe cash crunch. Almost all of them won’t have enough money to pay for their operating expenses. This puts them in a very difficult situation. Recent research show cashflow problems can force even the most profitable commerce establishments to become bankrupt. This is something these businessmen want to avoid at all costs.
How can entrepreneurs avoid a cash crunch?
Arnon Dror is a prominent financial expert in America with 2 decades of valuable experience. This MBA graduate from Hebrew University is the former Vice-President (Finance) of US Channel Group. He specializes in many diverse fields. These include cash flow management, international taxation, business modeling, internal control, ERP integration, and corporate mergers. Entrepreneurs just need to go through Arnon Dror biography on the internet. They come to know that he is a result-oriented executive.
This financial expert says entrepreneurs need to ensure their receivables arrive before the payables become due. If this is not the case, they are bound to face severe cashflow problems. This can jeopardize their market operations. The creditworthiness of these businessmen may come into question. This is the reason why they should keep in mind the following 3 important tips to avoid such situations:
- Lease necessary equipment rather than buying them outright
When acquiring equipment or prime real estate, many entrepreneurs prefer to buy such assets outright. They believe it is a better option to leasing them as they often get generous discounts. However, taking such a step puts immense pressure on their organization’s cash flow position. These businessmen soon come to realize they don’t have much money to conduct their market operations. This is not a situation they want to find themselves in. This is why they should consider leasing necessary assets rather an outright purchase.
- Assess the creditworthiness of new customers
Many entrepreneurs may come to know they have certain slow-paying customers in their clientele. These businessmen normally take an enormous amount of time to clear their dues. Many of them may even refuse to forgo this habit in spite of constant reminders. In many cases, these proprietors have no option but to penalize them. In the worst-case scenario, they may even restore to legal action. This makes them very cautious of people they don’t know bringing them lucrative proposals. In such a case, they should check into the creditworthiness of these potential clients. Only then should they enter into a fully binding contract with them.
- Open to alternative modes of payment
Entrepreneurs should have an open mind to accepts alternative modes of payments from their customers. This could include internet banking, cheques, business credit cards or electronic transfers. Taking such a step eases the pressure on their cash flow position. They can even use the same sources to clear their own dues.
Entrepreneurs need to remember that a cash crunch can ruin their businesses. Fortunately, implementing the above 3 important steps can help them avoid such a situation. This makes it easier for them to conduct their market operations. They just need to see the Arnon Dror video on YouTube on the issue. It can clear all their doubts.