Cash Flow is King!

Cash flow problems can quickly creep up if you don’t have the practices in place to handle tight times.? Putting in good practices not only keeps you cash flow rich which improves the value of your company, it also helps you mentally know that you have a plan and a backup plan in place and there is no need to worry.? Below are 19 best practices you can enhance or put in place today to improve your cash flow and 4 more ways to put a back up plan in place.? That’s 23 ideas to improve your cash flow position! Run through the list, all you need is one new idea to get started.

1. Instill in your brain, Cash Flow is KING/QUEEN!
2. Never spend money before you get it.
3. If you can’t write it off OR if it doesn’t help you earn revenue OR if it doesn’t help you save money, don’t spend money on it.? Every dollar you spend ideally has a positive ROI on the well-being of your employees, your clients, and your business.
4. Evaluate if you really need full-time employees or if fractional help is more cost effective.? Make sure you factor in the total cost of an employee including not only their salary, but their benefits as well.
5. Find areas where leasing/renting is more cost effective AND better for the company.
6. Have a budget and realistic forecast of revenue and expenses.
7. On a monthly basis review your expenses and look at areas where spending was over/under the budget and identify ways to improve spending.
8. Shop for better rates on insurance, benefits, supplies, phone service, etc. without impacting the value you receive.
9. On a monthly basis review your revenue and look at areas where revenue was over/under the budget and identify ways to improve your revenue.? Also look at how the difference in the budget impacts your forecast.? For example, will you have enough employees to support your forecast?
10. Don’t lose money. ?Remove revenue leakage. Find areas where you have leaks in your financial situation.? For example, missing inventory, revenue generating employees that don’t show up for work, etc.
11. Accounts Receivables - protect your Days-Sales-Outstanding (DSO).? Are your customers paying you ON TIME?? Find ways to help your customers pay you on time.? For example, are your invoices accurate, do you make it easy for your customers to pay you (paying online, etc.), do you send reminders before the invoice is due, do you enforce late payment penalties, do you provide incentives for paying early?
12. For high dollar spending by your customers, conduct customer credit checks and provide options to pay monthly or in installments.
13. Consistently review your prices.? Raise them when it is most feasible for your business to remain competitive.
14. Reduce high-interest debt. Consolidate or refinance where possible.
15. Accounts Payable – always pay on-time.? You never know when paying late impacts your credibility.? Also, if you need to, pay on the day the bill is due unless it serves you to pay early.
16. Stay top of mind with your customers and be kind.? Customers are more willing to pay your bills if they like you.? Make sure your employees practice this as well.
17. If you have equipment laying around that is not in use, find ways to rent it out when you aren’t using it for your own revenue generation.? While this increases revenue, it is also an easy way to increase your cash flow as the revenue, in theory, has very little related expense.
18. Follow-up to ensure a job well-done.? If there is any doubt in your customer’s mind that the job is left undone or not to their satisfaction, you may not get paid on time, may get paid less or not at all.? Make it right for the customer early.
19. Train your employees on good money practices.? It’s everyone’s job to be efficient and effective with their time, their use of equipment, how they treat your customers.? In the end, when your employees are happy and productive at work, this flows into their own life.

Below are 4 back up plans to ease your state of mind and are readily available in the event your best practices aren’t in place or aren’t enough.

1. Create emergency account(s) that has 2 months’ worth of expenses stored up that are liquid.? Ex. If you spend in your business on a monthly basis $2.4M in expenses, then ideally have $4.8M in liquid assets. Please treat it as an emergency account. If you are tapping into this account on a monthly basis, something needs adjusted.
2. Have ready access to other people’s money when you need it.? Ex. ?A line of credit.
3. Ensure your credit worthiness is exceptional in the event you do need to get a loan.? Your bank and other lenders will be far more forgiving if you haven’t missed payments in the past and your business has shown profitability on a consistent basis.
4. Have a business continuity plan in the unlikely event that your normal business operations are impacted (e.g. Covid, Tornado, hacker etc.).? Be able to adjust so your clients, employees, and business operations can continue.

Money will flow to you when you pay attention.? Putting in these practices will give you peace of mind as well has becoming the Cash Flow King/Queen!

Dedicated to your success!