What to Do If Your Company is Dealing with Financial Challenges
by Ronald Wolf Business ConsultantWhat to Do If Your
Company is Dealing with Financial Challenges
There
are many different ways for your company to be in a financial thought spot,
even without doing anything wrong. The global market may shift or encounter
problems and many unexpected problems could land you in a problem. Still,
getting out of these problems is a fairly simple matter. All you have to do is
find the right way to cope with some of these financial challenges the right
way around. With that in mind and without further ado, here are several key
points to keep in mind.
- Reduce the overhead
The first stop on recovering your business lies in improving your company’s
profitability. As long as your business is profitable, you won’t be in that
desperate of a situation. Still, profitable vs. non-profitable are two ends of
a spectrum, which is why there are numerous degrees in between to consider. The
pace at which you’re losing money may determine how quickly you will have to
close down. By reducing the overhead, you will find yourself in the scenario
where you are making more profit (or losing less money) even with the same
income.
- Don’t skim on your staff
In
the previous section, we’ve talked about the importance of reducing your
expenses but there’s also the matter of burning cash to make cash. You
can’t skim on bonuses, even if you do decide to lay off some people and there
are all sorts of investments that need to be made for things to speed things
up. Remember, laying off some may seem cruel but the effects on productivity
are definitely lower than pay cuts for everyone. Regardless of how strong the
collective spirit is around the office; self-interest is often the key to the determiner of one’s intrinsic motivation.
- Improve the cash flow
There
is one thing that you need to understand about your income – there are two
types of it. There’s a difference between account receivables and hard cash.
With your account receivables, you have the money (in theory) but you still
have to wait until you collect it. The problem is that you have financial
obligations that need to be covered right now. One of the ways to transform
account receivables into cash is to sell
these invoices to a factoring company. Sure, you get a lower net value out of these
invoices but you get money right away. Other than this, you can also encourage
instant payment.
- Consider some situation-specific options
Getting
a specialized advisor for your scenario is incredibly important. If it’s the
taxes that you’re struggling with, find an accountant with a past in this
field. On the other hand, if you’re currently looking for advice and insolvency solutions, you need to opt for a professional service in this
field. The key thing to keep in mind is the importance of devising the
long-term strategy that can get you out of this problem quite effortlessly.
- Don’t forgo your debts
The
next thing that you need to keep in mind is the fact that you may have debtors
of your own. This puts a lot of entrepreneurs in a bit of a tough spot. On the
one hand, you don’t want a potential return customer to feel like you’re
strong-arming them. Second, you may lack the tools to get your money back, to
begin with. On the other hand, you have so many financial obligations yourself
and you simply can’t afford to be too tolerant regarding the money that you are
owed. Instead, it might be a good idea to hire
a debt-collecting agency to
help you out.
- Explore your tax options
Tax
deductions can help you find a way out of many different scenarios. You see,
you may have so much money in potential tax deductions. One example is the fact
that you can even deduct dry cleaning while on a business trip as a business
expense. Moreover, for all those who are working from home, there’s a chance to
deduct a part of the utility bill as a cost of running a business. This way,
you can skim a bit by bit until you make a big enough financial difference.
Depreciation is another field where you could skim quite a bit.
In conclusion
In
the end, you need to understand that Rome wasn’t built in a day. You see, the
financial problem that you’ve gotten yourself into is probably not a result of
a single mistake. It’s probably a result of a flaw in your long-term business
plan. Since it took a while to escalate to the status of a full-blown financial
crisis, it would be unrealistic to expect that it can be fixed in a matter of
days. So, arm yourself with patience before you proceed.
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Created on Nov 30th 2020 05:38. Viewed 736 times.