It Can Happen to Any Business.
Cash flow problems can happen in any business, big or small, and is often one of the main causes for the failure of a business. However, depending on your sector, your cash flow problems may vary. Therefore, this article will focus on the hospitality sectors main cash flow problems. Knowing what to look out for should help your business to keep your cash flow in the green. So, what are some of the main causes of cash flow problems for the hospitality industry?
Seasonal highs and lows are common in the hospitality industry, often leading to downward pressure on cash when you may need it the most. It’s important to put some extra money away during those peak times in case of a rainy day. This will give you security and peace of mind during the seasonal low. If you don’t already have a business savings account, consider opening one, but make sure to shop around and compare before you commit. Preparing for the seasonal low can be challenging due to it being unpredictable, but by staying organised and having savings behind you, hopefully any major cash flow problems can be avoided.
Your relationships with your suppliers can have a significant impact on your finances, so consider whether cash on delivery or monthly payments are best suited to your business. Try to pay in full when your finances are healthy, so you have one less bill to worry about should you hit a financial strain. Another option is to discuss flexible terms with your suppliers as they may be more open to it than you think! As the old saying goes, “you’ll never know until you try”!
Cash Flow Management
Even great hospitality businesses fall into financial difficulty and often it’s because they haven’t got a full handle on their cash flow management. Carefully monitoring and managing the cash flow in your business makes it possible to anticipate difficulties in the short and long term. One great solution to this is investing in online bookkeeping software, such as Big Red Cloud, who make cash management virtually effortless.
Explore what switching deals are available from other providers by shopping around. Speak to your commercial neighbours to find out if they are enjoying better deals and if they are, get that provider’s details to see what is available. Either switch or use this information to apply some pressure on your existing provider, as they will usually offer a better deal to retain you as a customer.
Cash Flow Finance Solutions
Downward pressure on cash flow, due to unforeseen events or circumstances, are near impossible to plan for or mitigate against. This is a good time to consider a short-term business loan to help balance a cash flow dip. A cash advance is a smart working capital solution which can be accessed within a few days of applying. Repayments are made daily through your debit/credit machines, meaning this finance solution works with your business, no matter the season.