Whether you’re a start-up or an established business, one of your major concerns is cash flow. It refers to the movement of your cash and can be a good measurement of your liquidity. The more liquid you are, the better your business is. It means you can get hold of cash quickly whenever you need it.
Contrary to popular belief, cash flow doesn’t mean profits or revenues alone. Rather, it’s the difference between the money going in and out of your business. If you have more cash inflow than outflow, then you have a positive cash flow, which should be your goal.
Because of this, many factors can affect your cash flow position and cause different challenges. These include the following:
1. High Capital Expenses
It’s expected that when you’re starting or expanding your business, you’ll be spending a lot of money. This is especially true in Indonesia where capital requirements are high, and there are numerous fees to pay for company registration, hiring, and administrative tasks.
The problem comes in when your expenses are so high your profits cannot keep up. It can be compounded when you have a very poor collection system or it takes many days for your clients to settle your invoices.
The impact of debt is actually subjective – that is, it depends on how you use it. The issue with debt is it can place you in a never-ending cycle of borrowing. There’s a good chance it eats up your profits or gross margin, so you’re forced to make a loan to pay off your previous debt.
3. Too Much Investment on Less-Liquid Assets
It’s perfectly okay – and even recommended – for companies to invest in good and new equipment. In fact, the government can give you some tax incentives on that depending on your industry. You may also purchase a property, though the process in doing so can be very complicated.
But too much investment on these assets can affect your cash flow simply because they are not liquid. Unless you sell your equipment, you cannot generate immediate cash from it. Real estate, on the other hand, is the hardest and usually the longest to dispose. Simply put, you have money tied up to assets that won’t give you cash whenever you need it.
Save Yourself from Cash Flow Problems with a Shared Office in Indonesia
There’s no straightforward solution to a cash flow problem, but you can take simple and practical solutions today. These include renting a co working office in Jakarta or Bali.
But the question is how. One, you can significantly cut back on your capital expenses without compromising the basic needs of your business. With the savings, you can add more to your marketing to increase your customer base, invest in a good system or software to streamline your collection process, or have some reserves in case collection is slow.
Moreover, you have more cash to start paying off your debts more quickly. The faster you can settle them, the more you save money on interest. And because shared offices in Indonesia can already provide you with the facilities you need, from a strong Internet connection to meeting rooms, you can avoid spending on equipment and other less-liquid assets.
Looking for the best co-working space in Indonesia is easy. Begin with the options we have here.