Many companies run into cash flow problems from time to time. Retail stores, gas stations, house flippers, janitorial companies, restaurants — even health care businesses have periods of slow cash flow. If this happens to your company, you don’t have to feel bad. It is important to take steps to resolve the problem, however, because you need to pay your suppliers and keep your business running smoothly. Business lines of credit are an excellent solution.

Why Do Cash Flow Problems Happen?

The first step to improving your cash flow is to identify what things are causing the problem. A common issue is that clients take too long to pay you. In this case, you may want to implement a friendly system of reminders to encourage customers to pay on time, perhaps providing a small discount when they pay within 15 or 30 days.

Another reason for cash flow problems is periods of slow sales. This can happen to seasonal businesses during the beginning and end of slower periods, and it also happens with market changes. What can you do? Investing sufficiently in advertising can help keep new clients and loyal customers doing business with you.

That said, there will always be times when sales don’t meet expectations. That’s why having lines of credit is so important. They’re always available when you need them.

How Does a Line of Credit Help Your Cash Flow?

Unlike loans, which usually take a long time to apply for and get approved, lines of credit adapt to your needs almost instantly. They work similar to credit cards, but with better interest rates and spending caps. You only pay interest for the amount of capital you use, when you use it. The rest of the time, it’s just waiting there until required.

Many businesses use their line of credit as a safety net. It provides a sense of security for when the market changes unexpectedly. You never have to worry about missing tax payments or falling behind with your suppliers. This protects your business’s reputation and your credit score.

What Can a Line of Credit Cover?

There are no limits to how your company can use its line of credit to benefit cash flow. It helps in two main ways: proactive investments and reactive spending. Proactive means investing when opportunities arise, such as taking advantage of discounts to upgrade business equipment. You can also react to emergencies to cover expenses you weren’t planning for, such as repairs, payroll, taxes, or other needs. It’s no surprise that a line of credit is one of the best tools for small business owners.