New business owners are often taken by surprise by unexpected cash flow issues. Problems of that nature can cause serious concerns for any company. The last thing you need is to discover there isn’t enough money in your accounts to pay your suppliers. When that happens, you have to ask for an extension. Before you know it, you spiral into a financial situation that’s difficult to resolve. With that in mind, we wanted to offer some advice today that you can use. Hopefully, the potential issues mentioned on this page will give you a heads up. If you prepare for these events and keep extra cash in your accounts, you can weather the storm. So, pay attention, and put this information to good use as your business grows.
Credit Card Chargebacks
Chargebacks occur when someone calls their credit card company and asks them to reverse a transaction. That can happen when one of your customers isn’t happy with their purchase. It can also happen when someone just wants to play games and cause trouble. It’s a major issue for you because it means money can leave your accounts without notice. The credit card companies won’t contact you in mind instances. They will just send the cash back to the original account. Chargebacks are a real pain for business owners just starting out. For that reason, it makes sense for you to keep all funds in your bank for at least a couple of weeks after each sale. That way, you won’t miss the money too much if it disappears. Don’t rely on that income until you’re 100% satisfied the customer received their item and you avoided any problems.
Like it or not, someone could become injured when working for your company. When that happens, they will often make a claim for compensation. The money is designed to cover their loss of earnings and any medical bills. The process can become costly because you will have to pay for legal representation. You will also lose the worker until they recover, and that means your team is one man down. To limit the number of times that happens, you must place emphasis on adequate health and safety precautions. You should manage to avoid all workplace injuries if you get things right. As you’re just starting out, you might require some assistance. Thankfully, there are professionals you can pay to come to your office or warehouse and perform assessments. They will then offer advice on the best course of action.
Fines from the Government
Depending on the nature of your operation, you might have to pay government fines at some point. That is especially the case if your processes are deemed to harm the environment. There’s a big push towards green technology these days. So, maybe you should consider changing the way you work? Whatever you decide, make sure you research the potential fines you could encounter ahead of time. That way, you can ensure there is always enough money in your accounts to cover them. Of course, the best thing to do involves avoiding the penalties altogether. So, now is the time to perform as much research as possible. Regardless of your business model, there are always ways in which you can protect your interests. Even if you have to spend money upfront, it’s better than getting into trouble with the authorities.
Other Legal Issues
There are a million and one different legal problems that could affect your company. Considering that, you need to build a relationship with an experienced lawyer. If you do that, they will often let you pay for their assistance in monthly installments. That should stop the expense from affecting your cash flow too much. At least you will know how much you have to pay at the end of each month. There might come a time when another business owner claims you’ve infringed on his copyright. Court cases of that nature can take a long time to reach their conclusions. So, you need a reasonable specialist who won’t expect the payment upfront. Of course, you still need to keep a close eye on how many hours that person works on your case.
Now you know about some of the most common cash flow issues, we hope they won’t take you by surprise. There are lots of other things that could affect your operation. However, the instances mentioned on this page are by far the most likely. With that in mind, learn from the advice, and keep as much cash in your accounts this year. Failure to do that could mean you end up back at square one. That would be a shame after all the effort you’ve made thus far.
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