You might think that only small businesses have trouble with managing cash flow. After all, once you've built a large enough enterprise, you're making so many sales that the money is always flooding in, right?
Not necessarily, it turns out. Big companies have more revenue, but they also have more expenses to deal with. Sometimes, they have just as much trouble managing the cash moving in and out that small businesses do, just on a larger scale. Here's how the problem can be fixed.
Big companies have more revenue, but they also have more expenses to deal with. Sometimes, they have cashflow trouble.
Even corporate titans have cashflow issues
If you think big businesses are free from cashflow trouble, all it takes is one glance at the latest headlines to prove you wrong. For example: According to Seeking Alpha, Chevron is looking at a major tax bill and is unsure about finding the cash to pay it. The energy giant is dealing with major problems bringing in revenue, such as a shutdown at one of its export plants and a series of worker protests in Bangladesh.
It's not that customers are unwilling to buy fuel from Chevron, but because of breakdowns in the supply chain, the company might have trouble completing deals and collecting payments in the short term. With a $250 million tax bill in the balance, this could be a significant problem.
How can you get money moving faster?
Does your business have a Chevron-like problem with completing sales quickly and getting working capital into your accounts? One possible solution to this problem is to tighten up payment terms with your customers.
"If you don't start off knowing what your payment terms are, it is difficult to know when you are going to get paid," Suzannah Nichol of the National Specialist Construction Council told The Guardian. "If you don't know when a payment is overdue, how are you going to manage your cashflow?"
Of course, changing the way you deal with customers is just one way to improve your cashflow situation. Another possible option is to explore finance solutions that can revolutionise your way of doing business over night. For example, with trade financing on your side, you can collect cash quickly by using your pending sales as collateral. This way, there's no gap in time between the handshake deals you make and the moment you put actual cash in the bank.