Business Finance Problems - Here's Some Indian Capital Financing Solutions

Almost every small business & start-ups encounter a cash flow problem at least once in their lifetime. But the luckily, most cash flow problems can be avoided with a bit of groundwork and smart planning.

This write-up lists the most common business financial problems and their solution. 

High overhead expenses.

Overhead expenses are the expenses that use in running a business but not link directly with manufacture or selling products. Overhead expenses contain rent, telephone, utilities, etc. High overhead expenses can interrupt the cash flow of your business

Solution

To get rid of overhead expenses problem, you have to audit your expenses and cut back the unnecessary expenses. Be watchful not to cut excessively, as that approach could also badly affect the company's growth.

Excessive bad debt

Bad debt occurs when a company sell their products or provide services to the clients who are not paying their outstanding payments. Bad debt gives a direct hit to your cash flow and your productivity.

Solution

The best solution to this crisis is to re-examine the commercial credit of your clients before extending payment terms. And only provide terms only to clients who have a good credit score and a clear payment record. And other clients should prepay for the products and services. By doing this you can avoid the excessive bad debt very easily. And other best way to deal with fund shortage due to excessive bad debt is Accounts Receivable Financing solution. 

Slow-paying statements

Slow-paying statements are a common reason for business finance problems. A small business generally gives 30 to 60-day payment terms to the clients. But, if truth to be told, many small companies cannot afford to wait for this long period and they need funds instantly. In due course, slow payments cause a financial problem that can badly hit your business.

Solution

We can deal with this problem in two ways. First is giving your clients incentive & best offers to pay faster. Offering discount on fast paying is the best way to motivate your clients to pay before time. 

And another method is to take invoice factoring solutions to get immediate funds on the behalf of outstanding statements. 

Surplus inventory

This is the most common problem in the companies that manufacture goods or re-sellers that keep a storehouse stocked with products. If any company manufactured or purchased too many products, then it leads to blockage of funds. 

Solution

Best management for your inventory to store products for as much as short period of time before being sold. And the number of products you stock in your warehouse should depend on your sales forecast and capabilities.