Empty Coffers: What To Do When Your Small Business Account Runs Dry
To run your business successfully, you will need to have the proper financial backing. Sadly, many small businesses experience situations where their accounts run dry, meaning they have no capital with which to purchase resources or stock, pay their employees or expand. Happily, there are things that you can do, even in such a dire situation. Read on to find out what they are.
The most common solution when money is tight in a small business is to approach a bank or building society for a loan. Sadly, being approved for one isn’t always as easy as you would expect. In fact, often when it comes to business loans, you not only have to provide detailed paperwork as justification and evidence that you will be able to pay the money you borrow back, but it can take longer to get approved as well.
Of course, this isn’t much good when you are in a desperate situation and productivity has ground to a halt, because you can’t afford to pay for the resources you need. Therefore if you need a cash injection into your business fast, a bank loan may not be the best option.
Use credit to cover the cost
On the other hand, something that can work is to use credit to cover the financial gap that you are experiencing. In fact, if you already have a line of credit prearranged with your lender, you won’t need to go through all of the bureaucracy mentioned above.
Of course, not everyone has a source of credit already agreed on, and if this is the case, it’s well worth educating yourself on the difference between a secured vs unsecured credit card for your business. The reason being that even if you are struggling with poor credit, you still may be able to get the money you need to keep your business working, and so save it from disaster.
Another smart move that small businesses that find their coffers empty can make is to take any unpaid invoices and factor them. What this means is that they sell them to an invoice factoring company, who will then release the majority of the value back to them immediately.
The best thing about this method is that you can get the money very quickly and you don’t actually need to take out any debt. The reason being that the money is what was owed to you in the first place.
Negotiate with providers
Finally, if you find that your business account has run dry and you are struggling to pay providers for vital resources, why not get on the phone and do some negotiation?
In particular, you will want to aim to set up a credit account where they invoice you for the costs of the material you buy. The reason being that this will often take a month or more, and so give you some grace time to raise the money you need while still getting the items that are essential for your business, ASAP.