How to handle cash flow challenges

If you notice that certain customers are always pay late, there might be some actions needed to ensure your cash flow. 

Here are some solutions:

• Add a penalty fee for late payers.
• Give a discount to early payers.
• Change the payment terms to demand faster payment or payments in advance.
• Use factoring – sell invoices and get cash faster without your customers suffering for it.

There will always be risks involved with customer credits or receivables. Any customer could get into financial troubles, but the risk is often higher for new customers. New customers may also be more reluctant to paying in advance. 

Here are some solutions:

• Use direct debit to make sure you know the amounts and payment dates for incoming payments. This can also be used as a warning system – a cancelled payment could indicate that your customer has cash problems.
  
• When using factoring there is often an option to add insurance for the incoming payments.
• For international trade documentary credits or collections can be used. The buyer pays in advance, but the seller does not get access to the cash until the goods have been delivered. That way, both the seller and the buyer avoid risks.

Many companies deal with seasonal fluctuations in different forms, such as demand and supply or material costs varying over time. This can result in temporary cash shortages.

A good solution to balance cash flow challenges caused by seasonal differences is an overdraft as it is a flexible way to cover short term deficits. Apply for an overdraft from us and set up so that it is ready and available whenever the situation calls for it.

For cash flow planning to work the production needs to be on time and so does deliveries from suppliers. 

If this is an issue you can:

• Negotiate a discount for late deliveries.
• Look into different types of insurances that can protect you.
• For international trade it is also important to know the rules for risks during the transports of goods. Make sure to know when your business is the risk taker and get insurance to cover these parts of the transport.

Read more about service solutions regarding foreign trade from here.