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Building Strong Cash Flow Now & Into the Future

Updated: Mar 13, 2023

These strategies will help you take a holistic approach to your cash management.


Cash flow is one of the strongest indicators of the health of your business. It is a useful metric to quickly see how well you are doing, whether you are profitable, and how solidly your business can withstand storms. This is especially true when the metaphorical waves come crashing down, wind whipping you back and forth in a frenzy. (Sounds kind of like the market right now, doesn’t it?).


So, what can you do to help improve the cash flow of your business? What are the things you can do right now to make yourself more profitable and durable in the face of a stormy economy?


Here are some tips and strategies you can use across various sectors of your business.


1. Work on Expenses


Positive cash flow is every business’s goal. It’s as simple as bringing in more money than you spend. While building a business that brings in more money takes planning and time, cutting expenses is something that can be done today to improve your situation.

As Andrew Carnegie liked to say, “Watch the costs and the profits will take care of themselves.”


Tightening your belt can be as simple as looking at where you’re spending your money and deciding if it’s money that needs to be spent. Go through every line item in a budget to evaluate whether each is vital or optional. Cancel superfluous subscriptions. Tighten bloated budgets. Evaluate where every single dollar is going and ask the question, “Is this necessary?”


Talk to your vendors and suppliers. If you have built up a solid working relationship with them, they may work with you. Renegotiate prices and credit terms, or try to secure bulk order discounts.


Also, look at when you pay your suppliers. Instead of paying a bill the moment the invoice hits your inbox, evaluate when it is due and pay it then. Don’t make late payments of course, but if you have a $10,000 bill due at the end of the month, waiting to write the check gives you an extra few weeks to use that capital to generate revenue instead of drawing resources away.


2. Streamline your services


Another way to improve cash flow is to boost the efficiency of your operations. Explore your standard operating procedures and processes to see what actions can be cut and redone. Look into automation to streamline your workload. Look for positive disruptions – innovations that disrupt business as usual in a way that saves money, increases efficiency, or allows you to be more flexible. Look at your most tedious and time-consuming tasks and come up with ideas to eliminate them from your business.


This could mean finding software that allows you to do more with less effort, such as accounting software that automatically imports your data for you (we’re big fans of Xero).

You can also reevaluate your service delivery models. Run the numbers on keeping a service in-house versus outsourcing it. The total costs could come up less by letting someone else take over key areas.


3. Increase the capital coming in


Once you have your expenses in check, you can focus on getting more money moving through your business.

One way to do this quickly is to collect from customers sooner. We advocate for billing as much upfront as possible (read why in here). Regardless of how you bill, you always want to know exactly who has paid you and who hasn’t, and you want to be able to send them timely invoices and persistent reminders. Standardize your accounts receivable process and give your customers a consistent schedule to follow. Another key to great AR is to make paying you as easy as possible. You should also consider giving customers incentives to pay early and penalties for paying late.

Of course, to stay lean and efficient, you don’t want to spend a bunch of time combing through your billing to see who’s paid and who hasn’t. Get software that will automatically track this for you. Good accounting software can make the art of invoicing simple, especially if you’re working with an accountant or cash management advisor.


Finally, use the data you have to look at where you are going. Use forecasts and models to make predictions and get ahead of problems before they have a chance to get big. If you are crystal clear on your anticipated inflow, you're much better prepared to make choices in the other areas of your business.


4. Reevaluate your sales department


With your forecasts properly in place, you will know exactly how much capital will be available to deploy in your sales department to help you grow.


Evaluate your current marketing efforts. Where are you struggling? Where are you getting your best returns? What does the market look like for you and your customers?


You want to be able to identify where you are succeeding and double down on those efforts. Scrutinize your customer base. If they are doing well, capitalize on that opportunity. Look at increasing prices if the market allows for it. If they are struggling, find new pain points and try to help solve them. Brainstorm new ways to reach out and provide helpful services that your customers need right now.


You should also look beyond your current customers and see who is doing well in the current climate. Find new customers who are looking to expand right now - not just biding time until things turn around - and invest efforts at reaching them.


A key point here is to think about how your company is making itself visible in the marketplace. Look for places to expand your efforts and get your brand in front of the right people. Right now, the shift is to find new ways to leverage online interactions. With many people wary about in-person meetings, now is the time to find better ways to reach out virtually. Every industry has been slowly shifting towards an online presence, but the current predicament has accelerated this. If you aren’t already maximizing your online efforts, now is the time to pivot and explore those options.


Final thoughts


Increasing cash flow is one of the best ways to make sure your business is healthy, sustainable, and ready to take on the adverse conditions that so many industries are seeing right now. Use this as an opportunity to make your operations lean and efficient. Find those unnecessary expenses (time and money) and eliminate them.


As you do that, take advantage of advances in technology and software to make your operations more efficient. Make more accurate forecasts to create better plans, and evaluate your sales efforts to find where your opportunities are right now – not in a year.


Regardless of the economic climate, you can always find ways to improve your cash flow. At The SLC Group, you’ll find a team of advisors using a powerful set of tools including Xero and Profit First, and we’d love to help you find those opportunities with less effort.

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