6 tips to overcome the lack of liquidity in the company

[jrineakter]

Many SMEs suffer from liquidity problems all the time. Normally, when a business owner faces this situation, he or she usually tries to deal with the problem by “plugging holes”. That is, by borrowing more money from financial institutions. And most often, banks refuse to lend. After all, if you don’t have money, how do you plan to pay it back? Despite the negative nature of this situation, not all is lost. The business owner has the possibility of overcoming the lack of liquidity in the company. He or she just has to anticipate and get his or her financial situation back on track before it is too late.


The truth is that setting up a company does not require a lot of capital. To set up a limited company , the most common type of commercial company among SMEs, a minimum capital of 3000 euros is required.

However, the first tip you can apply if you want to prevent a lack of liquidity in your company is to increase the initial capital so as not to drown in the costs of the beginning. Logically, each iran number data company has its own needs, expenses and different income forecasts. Calculate how much money you will need for the first two years (at least) and add it to the initial capital.

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2. Cash flow audit
Normally, the lack of liquidity in companies is not a one-time problem, but rather one that has been around for a long time. It is due to poor cash flow management . So, if you have already created your company, the essential thing is to carry out an internal audit of the company's liquidity needs in order to successfully face daily activity.

In another article we have already seen that cash flow is vital for all types of business. If a company runs out of liquidity and is unable to obtain new income, financial insolvency can lead to bankruptcy.

It is therefore extremely important to analyse our current situation, how we got here and predict what will happen with cash flow to ensure the survival of the business.

3. Control the treasury
We must have a tool that provides us with daily visibility of our cash flow, of the status of our sales and collections. The important thing for a company is not to invoice. The important thing is to collect invoices as soon as possible . Many business owners do not take this into account and forget to control cash flow , thinking that the treasury is a replica of the income statement.

But they are not the same. The cash flow and the income statement reflect two different moments in the company. To calculate the cash flow we need to have collected the invoices and have the money available.

A good tool for controlling cash flow should also allow you to offer your clients payment options to minimize non-payment. Now with Holded you will have a global and detailed view of your cash flow and, in addition, you will be able to collect your invoices immediately with Paypal or credit card .

4. Know your customers
First, you will need to define and implement a risk management and collection policy in order to obtain better information about your customers in order to reduce the risk of non-payment and bad debt. If you know all your customers, the risk of non-payment will be reduced as you will be able to establish a collection policy appropriate to each of them.

Secondly, with clients who owe you invoices, you will have to reduce the debt through proactive management . Approach your client in a friendly manner, send them payment notices, send them an email, call them on the phone. And if all these friendly avenues do not work, start a payment order to claim unpaid invoices .

Finally, stay alert to new business opportunities. If you want to be financially independent, it is best to build a diversified client portfolio that allows you to spread out your income. This way, if you lose a client, it will be easier to recover.