With any business, there are many expenses that you will encounter. Some of these expenses you can plan for, such as monthly rent, utilities, and the price of your product; other expenses are totally unexpected, such as damages from natural disasters, vandalism, or theft. No matter whether the expenses are planned or unplanned, however, you must have enough company funds to pay these expenses. In these situations, cash flow is essential—the amount of money you have coming into your dealership will determine your bottom line.
At any point in running a business, cash flow can be a difficult problem to manage. Some months may be less lucrative than others, certain clients may not faithfully pay off their debts, or unexpected expenses may affect the amount of money you have available. In each of these scenarios, careful management of cash flow is key to ensure that your car dealership is able to remain open for business. The auto dealership cash flow issues lawyers at Arenson Law Group, PC are experienced in auto dealer law and understand how to help you and your company through cash flow difficulties.
Common Causes of Cash Flow Problems
Cash flow refers to the amount of money being transferred in and out of a business, which affects the amount of money you have available for business expenses. When customers purchase a car from your dealership, cash is flowing into your company. Cash flows out of your company when you make payments, such as those for rent or loans. When cash flow out of the company is greater than cash flow into the company, a business may need loans or credit to make ends meet. However, in the worst cases, a business may have to close due to a large enough cash flow problem. Some common causes of cash flow problems include:
- Low profits or losses
- High overhead expenses
- Excess inventory
- Too much bad debt
- Allowing customers too much credit
- Growing too fast as a company
- Seasonal demand
Many of these problems plague new auto dealerships, which are still trying to establish themselves, but long-standing companies may also face these problems due to many unexpected reasons. No matter the age of the company, cash flow can mean the difference between a business’ success or failure.
Contact a Cash Flow Issues Lawyer
Inadequate cash flow can be a serious struggle for you and your company. If your auto dealership is struggling to make ends meet due to problems with cash flow, you do not have to find a solution alone. A cash flow issues lawyer at Arenson Law Group, PC is prepared to help you put your company back on track. Our auto dealership lawyers have experience with this complex issue and understand the steps you need to to take to protect your business. To discuss your company’s specifics contact us at (319) 363-8199 today.
Written by James H. Arenson
Last Updated : March 8, 2024