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Cash Flow

12 Signs Your Business Is Hemorrhaging Money And How To Stop the Bleeding

The shortest path to profit is to watch your expenses as closely as you watch for new customers.

John Rampton




Cash is undeniably the lifeblood of your business. When it’s hemorrhaging money, it’s in critical condition.

You can prevent that from happening though by paying to the following 12 warning signs and knowing how to stop the bleeding before it’s too late.

1. You’re not tracking your expenses

Don’t feel too embarrassed about this. There are more businesses than you’re aware of that aren’t tracking their expenses like utilities, rent and payroll. However, that’s a problem for business owners because this doesn’t let them know how much they’re spending or earning.

In other words, if you’re spending more than your business is bringing in, then you’re just asking for a financial disaster.

How to stop the bleedingGather your expenses from the last six months and set-up a budget so that you can track your spending by category. This will let know how much you’re spending each month and where you can trim the fat if that figure is more than you’re bringing in.

Related: The Correlation Between Cash Flow Challenges And Risk

2. You’re unable to file your taxes

Speaking of expenses, one of your greatest is taxes. So, if you’re unable to pay sales, payroll, or income taxes on time, then that’s a bright, red flag that you’re not properly managing your cash flow. This is a major headache since this results in excessive costs of tax penalties.

How to stop the bleedingWhen it comes to taxes, preparation is your best weapon. Be aware of upcoming deadlines, get a ballpark figure by reviewing last year’s profit and loss statement, consider payment options, and meet with your accountant so that you can plan accordingly and store stashing away enough money to pay Uncle Sam.

3. You’re drowning in credit card debt


Don’t kid yourself. Credit card debt is bad. The interest rates are high and they don’t help you build wealth. However, that doesn’t mean that you shouldn’t have a business credit card on-hand.

In some scenarios, paying with plastic can come in handy when you use it to earn rewards or as a very short-term form of payment when you’re in a pinch. But, if you’re drowning in credit card by using it carelessly then you’re ultimately spending a small fortune on interest. And, that’s money that you could have used to invest in your business’s future.

How to stop the bleedingIf you are in credit card debit, then make paying that debt off a priority. You can start by paying more than the minimum payment each month. For serious debt, it may require making a commitment to get out of debt, prioritising the debt, creating a realistic budget, going on the defense by negotiating a lower interest rate, and thinking differently about spending, like using cash into of plastic,

4. You’re paying late fees and juggling bills

There are two causes of this scenario. Either you don’t have the money to pay your bills expense. This means that you’re paying late fees, or even worse, your services will be cut-off or your account will be placed in collections.

The reason is that you’re just lazy. And, if that’s the case, then shame on you. You’re just throwing money away each month.

How to stop the bleeding: If you’re neglectful about paying your bills on-time, then set-up automatic monthly payments, aka automatic bank withdrawal. This way you’ll never miss a payment again since it will be withdrawn from your bank each month.

If you don’t have the money to pay your bills, then it’s time to look at that budget you created and stop making decisions. For example, you may be able to get rid of unnecessary expenses like your subscription to the Wall Street Journal or being more mindful of variable expenses like office supplies or lunch for you staff.  There are also many alternative funding methods to help you get the cash you need.

Related: 10 Expert Tips On Managing Cash Flow As A New Business

5. Your customer invoices haven’t been paid in over 90 days

We’ve found that if an invoice hasn’t been paid within 90 days, then you won’t be paid. In fact, only 18 percent of those invoices get paid following 90 days. And, if you aren’t bringing money in, then how can you pay your expenses?

How to stop the bleeding: Invoice promptly and frequently. Better yet, invest in online invoicing software so that you can electronically send-out invoices and set-up automatic payment reminders.

6. Not negotiating


While the price tag is set-in-stone during B2C transactions, B2B transactions aren’t. If you aren’t negotiating with vendors, then you’re overpaying.

How to stop the bleeding: Always make a counteroffer. Don’t hesitate to ask vendor for a 5 to 10 percent reduction in rates. If they say “no,” then you may want to start looking for new vendors who will.

If you don’t think that you’re assertive enough, then ask a partner, employee, or even your spouse to play the “bad guy.”

7. You keep up with the Jones’s

I understand that your main competitor just bought a swanky new office, has the the latest gadgets, spent a fortune on handmade furniture and has a freaking in-house chef. And, that’s infuriating. Here’s the thing. That doesn’t mean that your business isn’t better.

They may have dumped all their funding into those expensive materialistic things – which means they can’t invest in improving their business.

How to stop the bleeding: While there is nothing wrong with impressing people, don’t be impractical. There’s perfectly fine used furniture and you can rent equipment for the time being. Remember, only buy what you need, not what you want.

8. You have trouble meeting payroll

Payroll is arguably your second most important expense after taxes. So, if you’re stressed out about paying your employees, then you can be certain that you’re in serious financial trouble. And, if this keeps happening, you may get into legal trouble as well.

How to stop the bleeding: Payroll is a priority. And, you may have to take some extreme measures to make payroll in the short-term. This includes forgoing your salary, finding methods of financing, or selling your assets. After that, you may have to restructure your business and met with a financial advisor so that this doesn’t occur again.

Related: How to Tighten Cash Flow Management in a Difficult Economy

9. You don’t have an emergency fund

Setting aside a little something for an unexpected expense is recommended not just for business owners, but pretty much everyone. For example, what if you run a moving company and a couple of your trucks are shut down due to flat tires and mechanical problems.

With your trucks in the garage, you can’t make money. But, what if you don’t have the money to make the repairs? Now you have to scramble and do something desperate like take out a loan or line of credit.

How to stop the bleeding: The easiest way to start building an emergency fund is to automate your savings. Have a portion of your pay cheque or profits automatically deposited into your savings account. You can also automatically transfer funds from one account to another, such as $200 from your business’s checking account to savings account.

A budget will help you determine how much you can set aside each month without getting into trouble.

10. You’re not making wise hiring or outsourcing decisions

Payroll is typically the biggest expense a business owner is responsible for. It’s one of their most expensive expenses. Hiring the wrong people means that you have to keep training new employees over and over again. That gets expensive.

If you’re not ready to hire full-time team members, outsource tasks to talented freelancers. This is almost the norm these days. With more than 54 million freelancers, there are many options. But, don’t go overboard. Outsourcing too many tasks can quickly add-up.

How to stop the bleeding: It’s always cheaper to retain employees, so make sure that you hire correctly the first time by making sure that they’re not talented, but also a good fit for your company’s culture.

As for outsourcing, it may be better to pay for you and your team to receive training in these specialised tasks.

11. Your finances are disorganised

I can admit that bookkeeping isn’t at the top of priorities. But, I quickly learned years ago that it’s necessary if you want to succeed as a business owner. For starters, it makes managing your invoices and expenses a whole lot easier since you which payments have come and gone.

That’s also useful during tax season. Additionally, keeping your books organised makes it easier to claim deductions and secure funding since investors will want to examine your books.

How to stop the bleeding: Hire a bookkeeper, CFO or business accountant. They know which deductions you can claim and how to keep financial records organised. Most of the time they can be hired part-time or on a as-needed basis.

12. You’re getting bad financial advice

By all means. Hire a professional who can keep you updated on the latest tax regulations and steer you in the right direction financially so that you’re more informed decisions and stay-on-the-right-path. Because finding the right person for this job is so important, you have to make sure that this individual is legit.

How to stop the bleeding: If the advice is confusing, the advisor has a vested interest, and if the advice comes unsolicited, you can be certain that you’re being scammed or in the company of a lossy advisor. Seek referrals from people that your trust or use reliable online resources.

John Rampton is an entrepreneur, investor, online marketing guru and startup enthusiast. He is founder of the online invoicing company Due. John is best known as an entrepreneur and connector. He was recently named #2 on Top 50 Online Influencers in the World by Entrepreneur Magazine and has been one of the Top 10 Most Influential PPC Experts in the World for the past three years. He currently advises several companies in the San Francisco Bay area.


Cash Flow

The Simple Way To Pay Wages When Your Staff Don’t Have Bank Accounts

If you have employed casual workers over the busy season, you can pay wages even if they do not have bank accounts.






At Absa Business Banking, the things that are important to you are just as important to us. We understand your business needs, which is why we have developed tailored solutions to help you where it counts. Take CashSend Plus, for example. It is a payment solution that enables you to pay workers even if they do not have bank accounts.

Related: Hiring Your First Employee? 5 Things You Need To Know

It is safe and secure

Your employee will receive a six-digit access code and a ten-digit reference number, so that they can verify the transaction. The money is instantly available at an Absa ATM.

You can even pay yourself

We have all lost bank cards or wallets at some point in our lives. What an inconvenience. Well, it is good to know then that you can access cash by sending it to yourself. Now, that is what we call better. 

Related: How Salary Transparency Empowers Employees – And When Not To Use It


Please speak to one of our consultants or call 0860 111 123 or visit your nearest branch.

Absa Business Banking 

Do better business. Prosper.

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Cash Flow

Entrepreneurial Balancing Acts with Debt

Young South African entrepreneurs face many challenges when it comes to debt-related financing. Small and medium enterprise (SME) owners typically require extensive debt financing from bank and non-bank lenders.

Harald Merckel




Young South African entrepreneurs face many challenges when it comes to debt-related financing. Small and medium enterprise (SME) owners typically require extensive debt financing from bank and non-bank lenders. Unfortunately, many South African entrepreneurs are limited in their ability to access capital markets. Among others, the major challenges facing entrepreneurs include lack of credit history, no collateral, shaky credentials, and unformulated business plans.

Regardless, SA entrepreneurs are forging ahead and using multiple resources at their disposal such as payday loan providers, non-bank lenders, family and friends, crowdfunding and other economic empowerment initiatives to raise the necessary seed capital for investment purposes. Given the staggering unemployment rate in the country (+25%), the only way out for many people appears to be entrepreneurship. The 2008 global financial crisis threw the economy for a loop, and now the hopes and dreams of many South Africans hang in the balance.

Related: Every Tough Choice Has Management Debt – Are You Accounting For Yours?

ISM Study Sheds Light on SA Entrepreneurial Pros and Cons

An intensive study conducted by the University of Cape Town’s Unilever Institute of Strategic Marketing (ISM) found that the country is experiencing ‘a crisis of aspiration’. Simply put, many South Africans are struggling to attain their career objectives in an economy that has been ravaged by corruption, mismanagement, and scandal. Despite tough economic times, South African entrepreneurs are determined to try their luck. Pressing challenges in the form of rising unemployment, and an economy mired in failure are challenging entrepreneurs to be more inventive than ever before. The most volatile component of the economic spectrum in South Africa is the middle class.

Many South African families have lived the high life, or ascended the rungs and then been knocked down a peg. This instability is creating added volatility in a country where high crime, mismanagement and political rancour pepper the scene. For many entrepreneurs, any access to credit is a godsend. Banks and non-bank providers offering personal loans, business loans, or credit card funds invariably expose themselves to debt default. For entrepreneurs, it’s important to know where to draw the line. Access to lines of credit in a crippled economy is significantly more valuable than the equivalent access in a developed economy.

How to Know when you are Overstretched as an Entrepreneur

Debt is considered a prerequisite for investment purposes. Most South Africans simply don’t have the necessary capital to start up a high-tech venture, fund a new business, or conduct marketing and advertising activity. As such, lines of credit are increasingly being used to propel business activity among SMEs – both in the formal and the informal sector. However, once debt reaches untenable levels, the tough questions need to be asked. For example, if multiple loans and multiple payments are required monthly, revenue streams need to be evaluated against expenses to gauge whether this is a feasible status quo.

Related: How To Handle Your Post-Holiday Debt

Many entrepreneurs find it difficult to manage multiple loans simultaneously, although it is necessary to acquire the capital from multiple sources. One of the ways to deal with these types of exigencies is a single loan from a low-cost lender in the form of debt consolidation loans. Simply put, these loans are provided by bank or non-bank lenders at lower interest rates than the prevailing interest rate on other lines of credit. By taking out a debt consolidation loan, the entrepreneur has more disposable income over time by not paying the higher interest on credit card debt.

Escape Debt Before Debt Consumes You

There are several other ways to know when your personal financial situation has reached critical mass. For starters, the nature of your business may require you to continue dipping into lines of credit to maintain business operations. If you don’t have the requisite discipline to stop indebting yourself, you may not be able to get out of debt. Debt consolidation is only effective insofar as you have the necessary discipline to put an end to debt financing of all business-related activity.

Credit should be used sparingly, and profits should be generated to allow your business to prosper. In a tight economic climate, costs are the bugbear that need to be attacked. Lavish trappings are unnecessary for business functionality – modest budgets, and high-quality goods and services are far more effective than window dressing at a premium.

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Cash Flow

How South Africa’s Small Businesses Plan To Invest Their Money In 2018

Here are their five areas they should focus their attention on in the next year and beyond.




Despite economic uncertainty, South Africa’s small businesses are positive about the future. In fact, our State of South African Small Business report reveals that 40% of small businesses are expecting to grow. However, to achieve growth without overextending their limited resources, small businesses need to invest wisely.

Here are their five areas they should focus their attention on in the next year and beyond.


When times are tight, companies typically reduce their marketing spend. This isn’t the case for 36% of South Africa’s small businesses. These respondents recognise marketing as a critical investment area.

They’d rather make a concerted effort to grow their customer base, than sit still and do nothing as consumer demand declines.

Related: What To Consider When Investing Your (Hard-Earned) Money


Without access to the latest technology, business growth can quickly stagnate. This is why 23% of South Africa’s small businesses plan to invest in up to date equipment, whether that be new machinery, mobile devices or computers.

The right investment in this area can give a business a real competitive advantage.

It can help boost profits and improve operational efficiency – both of which can help a small business withstand difficult economic conditions with greater success.

Product development

Consumers are spoiled for choice. Their needs are constantly changing and companies can’t afford to become complacent. To keep up with market demands, 22% of small businesses plan to invest in product development. Barring a few timeless classics, most products need a regular review and tweak to stay relevant and popular.



Digitisation is transforming business functions across the board. Technologies, like cloud software can take care of laborious administrative work.

Related: How To Make Money Investing, According To Ashton Kutcher

This liberates employees from time-consuming tasks, enabling them to focus on more strategic work like customer retention and acquisition.

Technology has the power to improve productivity and efficiency. Which is why 18% of small businesses are going to focus their investment plans on this area of their businesses.

Customer service

The customer should always be the priority. It doesn’t matter how good a product is, if there are no customers, then there’s no business. As competition increases, the user experience becomes more and more important to win over customers.

Business growth depends on happy customers and to achieve that, 18% of small businesses plan to invest in delivering better service.

All five of the above business areas are worthy investment focuses. The question is, how does a small business work out what to invest where? The only way it can invest effectively is with a full view of its company finances. A small business needs to be able to see which functions have provided the best return on investment to date.

Related: 12 Millionaire Habits To Start Making Serious Money Soon And Build Wealth In A Hurry

It also needs to consider how much investment capital it has to spend. What’s more, before it makes an investment in say, marketing or product development, it must know exactly how and where the money needs to go.

The right software can help a small business access the real-time insights it needs to make better, faster financial decisions. To combat increased competition and market uncertainty, South Africa’s small business owners need access to up-to-the minute information from any device no matter where they are. An informed investment has the greatest chance of success.

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