We’ve all been there. An unexpected hiccup in your accounts receivable leads to missing a purchase order deadline. This lack of cash-flow causes your shelves to sit empty or with a limited selection, resulting in reduced sales, further compounding the problem. Or an unexpected repair becomes necessary, causing financial stress. No matter how it happens, unforeseen financial difficulties can cause undue stress for any business owner.
But life isn’t a straight line, and neither is business. Don’t stress over short-term problems; rather, take action to rectify the problem and get your business back on the right track. Here’s where to start:
Identify the Problem
You can’t overcome financial difficulties at in your business without knowing the core problem. If you know your monthly obligations are crushing you but don’t know where it started, there’s no way to start mitigating the issue. Take some time to look at your finances in-depth and find the common denominator. It may turn out that you’re struggling to pay the bills because you haven’t followed up on late accounts receivable, or because a high-ticket client canceled and you haven’t replaced them yet. It could also be due to an unexpected expense that came up.
Find the Cause
Once you’ve identified the problem, it’s time to find the cause. An in-depth investigation on accounts receivable may find that your clients aren’t paying on time because you don’t have a COD agreement in place. Or perhaps you’ll find that you haven’t replaced that high-ticket client because your RFP process isn’t aggressive enough. No matter what caused your unforeseen difficulty, the way to solve the problem is through identifying the cause.
Propose a Solution
Next, look at ways to mitigate the problem by addressing the cause. The ideal solution to your slow accounts receivable department might be a more assertive follow-up process, where you contact clients with polite and friendly payment reminders once an invoice is past due at 30 or 60 days. You may need to obtain new clients or referral sources to increase your cash streams. Establish an internal system for contacting potential clients and building new relationships. You could also implement a marketing campaign to your existing customer base. Having a plan is crucial when it comes to solving the problem.
Don’t stop once you’ve landed on a potential solution. Take a hard look at your team, and recognize where team members’ strengths can be an asset to the process. Have an accounts manager with a great client-facing manner? Use him to handle your new outreach process and land more revenue streams. Do you have a detail-oriented accountant who’s great at holding herself to a tight schedule? Have her monitor accounts receivable and reach out to clients whose accounts are past due.
Most importantly, recognize that you can’t do it all yourself, as tempting as that may be, especially if you’re a Type A or have strong roots in sole proprietorship. Overcoming a temporary financial hurdle is much easier with a strong team standing by your side. Enlist help when you need it—it could help you get your business back on the straight line more quickly than if you were working alone.
After you’ve identified the problem that caused this unforeseen difficulty, and put steps in place to get your business back to its normal operations, it’s time to make sure that these changes actually made a difference. Set targets, such as a goal to land a $50,000 long-term contract, or to cut accounts receivable time lapses from 60 days average to 30 days or less. Then, once a reasonable amount of time has passed, measure your progress toward that goal and evaluate whether it’s the solution that you needed.
You don’t always land on the right solution the first time, and that’s okay. Problem-solving isn’t always a straight line, either. If you don’t meet your targets or you find that you’re still struggling, go back to the drawing board and modify your solution until you’ve found a way to make your business function the way it needs to.
Need to Get Out of Trouble?
If you’re already having financial difficulties, you might be worrying about how you’re going to finance troubleshooting and department changes needed to get your business back into the green. An alternative loan could be just the solution you need. By expanding your working capital in the short-term, you can propel your business back into long-term success.
Let Mulligan Funding assist you with a personalized financial partnership relationship to help you through this process. We can to help you get your business back on track. We know that life isn’t always a straight line, so we’re willing to work with your challenges until you’re back where you need to be. We’ll provide guidance in addition to access to capital, and you don’t have to worry about the limitations of a traditional bank loan.
Ready to start troubleshooting your business difficulties and get back on the right track? Call Mulligan Funding at 855-326-3564 to discuss your financing options today!
The information shared is intended to be used for informational purposes only and you should independently research and verify.
Note: Prior to January 23, 2020, Mulligan Funding operated solely as a direct lender, originating all of its own loans and Merchant Cash Advance contracts. From that date onwards, the majority of funding offered by Mulligan Funding will be by Loans originated by FinWise Bank, a Utah-chartered Bank, pursuant to a Loan Program conducted jointly by Mulligan Funding and FinWise Bank.