Your employees deserve a fair wage and to receive their paychecks on time. When the budget gets tight, skimping on payroll is not an option. While you might be able to lower other expenses, reducing wages, writing bad payroll checks, or paying employees late will soon mean that you have no employees working for you. The key is to prepare for financial difficulties in advance so that making payroll never becomes an issue.
Evaluate Accounts Receivable and Accounts Payable
Positive cash flow is critical to the success of any business. If you don’t keep tabs on it and try to improve it, you could suddenly find yourself in a situation where you don’t have enough money to pay employees. Even if you have outsourced accounts receivable and accounts payable, you should know how much money your company takes in and who it pays. You may need to pay outstanding invoices late and deal with the fees rather than pay employees late.
If ongoing late payments with certain customers are a problem for your business, consider changing how it collects money. Asking for a down payment and providing on-time payment discounts are just two ways you can do this.
Consider New Streams of Revenue
You may occasionally need to get creative if you can’t meet payroll or other expenses. For example, could you lease office space or sell a piece of equipment? Tap into your personal savings? Qualify for a bigger tax refund? Don’t overlook any possibility of bringing more revenue into your business while working hard to control expenses at the same time.
When you have exhausted other avenues of meeting payroll, it may be time to secure business financing through an alternative lending program. We invite you to contact GP Solutions today to learn more about our small business financing programs.