12 Tips for Handling a Cash Flow Problem in Botswana, 2024

Small businesses in Botswana face many challenges, including regulatory constraints, red tape, lack of access to funding, service delivery issues and, of course, economic pressures.

Low economic growth means many small businesses in Botswana face increased cash-flow problems. Without a healthy cash flow, small businesses quickly encounter problems paying staff, ordering inventory and keeping the lights on.

In this article, we offer 12 tips for a small business handling a cash-flow problem in Botswana in 2024.

1. Create and stick to a monthly budget

Creating a monthly budget should be one of the first things you do when starting a business. Sticking to a budget can help prevent cash-flow problems in the first place.

Include all monthly expenses, so you know how much you must make to turn a profit. Lucrative months can cover those when income falls short.

If you’re starting out and need help creating a budget, this guide talks you through the process, highlights key facts and figures, and provides free templates for a profit and loss report and balance sheet.

2. Park any surplus in a savings account

In the months when your business is flush with cash, transfer it into a flexible business savings account with a competitive interest rate.

You can watch the money grow and easily access it, if and when you need it again. Banks like Stanbic have business savings vehicles where the interest rate is based on the balance in the account.

3. Look for ways to cut expenses

Take a close look at your expenses to see where you can cut costs. A small decrease in monthly bills can make a difference.

For example, will your insurance premiums reduce if you switch to a different company? Will a new supplier sell you inventory or materials at a cheaper rate?

There are countless ways to reduce business overheads, from going paperless and using word-of-mouth marketing to buying used machinery and equipment.

An American outsourcing company has compiled a list of 50 ways to cut business expenses that you can use as a reference.

4. Find new sources of revenue

Examine your business’ offering and look for unexploited sources of revenue. This could be introducing a new service or product.

Try to find sources that don’t require too much additional expense, such as buying new materials or equipment.

An article by a US business software company, “How to add new revenue streams to your small business”, has a few great ideas that you may want to adopt. 

5. Renegotiate payment terms with suppliers

Contact your suppliers to try to renegotiate your payment terms. Some suppliers will offer a longer payment window or repayment plan.

If a supplier knows it will get a lot of business with you or you’ve been a long-standing customer, it might offer better rates.

Negotiating better terms isn’t as easy as picking up the phone and laying down the law. It takes time, effort and skill. Here are six tips to help you achieve your goal.

6. Invoice promptly and chase overdue invoices

Many businesses offer 30-day or 60-day payment terms. If you’re experiencing cash-flow problems, invoice clients as soon as a job is completed. 

Get your accounts department to chase all overdue invoices. Late payments are a common cause of cash-flow issues.

If your business doesn’t have an accounting department, there are efficient digital invoicing solutions that have all the features and functions you need.

Some, like Zoho Invoice, are free tools developed for start-ups, entrepreneurs and micro-businesses. The app allows you to send out invoices from your mobile phone, set reminders for outstanding payments, and keep track of your clients’ payment status.

7. Raise your prices

When inflation causes business expenses to increase, you must raise the prices on your goods and services.

Always reassess your prices periodically to ensure your goods or services aren’t under-priced in the current market.

8. Clean up the inventory

Take stock of your inventory and make a list of the items that aren’t selling. Make a point of getting rid of them as quickly as you can, even if prices have to be marked down.

Slow-moving products tie up cash. This money is better used to improve cash flow, cover operational expenses and grow the business.

9. Introduce new payment options

Offer more ways for customers or clients to make payments. For example, introduce the ability to use a credit card.

Online third-party payment systems such as PayPal encourage more sales and prompt invoice payments. Some other options to consider include:

• DPO Pay
• Cybersource
• Orange Money
• Tingg.

10. Access responsible lines of credit

A responsible line of credit, such as a business credit card, that’s carefully managed can help keep your business afloat.

You might approach the bank for a business loan if you feel the current cash-flow issues are temporary and you’ll be in a position to pay it back within a reasonable period.

The Bank of Baroda and African Development Bank have funding solutions targeting SMEs in Botswana, while the United Nations Business Supplier Development Programme has entered into partnerships with banks to enable more streamlined access to capital.

11. Sell non-vital business assets

Selling a valuable business asset that isn’t vital to everyday operations is a quick and easy way to give your business a much-needed cash injection.

The downside is you might need the asset in the future, which will mean buying it again, possibly at a higher price.

12. Use a movable asset to raise funds

Instead of selling a movable asset like a company car or other business vehicle, you can access its value by using it as collateral for a short-term, asset-based loan.

This type of loan is ideal for bridging the gap if your business is experiencing temporary cash-flow issues.

At Lamna, we offer fast, discreet loans against the value of a wide range of movable assets. This type of loan could be the answer if you’re currently handling a cash flow problem in Botswana. For more information, contact our Gaborone office on 71 388 088 or simply complete and submit our online application form.

Lamna Botswana is a division of Lamna, which also operates across South Africa and in London, England.