Get a Good Night’s Sleep with Control Over Your Cash Flow

Sure, cash is king. That old adage is a great reminder that cash is the lifeblood of your business, but it doesn’t so much to actually help you manage your business on a day-to-day basis.

 If you’re losing sleep over cash flow issues, you need more than cutesy aphorisms to set you on the right track. The good news is, changing your daily activities and adopting cash flow positive behaviours can have a significant impact on your business, from your ability to grow to its overall long term health.

 How can you put your cash flow issues to bed and rest easy?

1. Put Your Cash Flow Issues in The Proper Perspective

You can go without sleep for a short while but eventually, you’re bound to crash and burn. The same goes for cash.

Limping along with negative cash flow means you’re unable to invest in your company’s success. You can’t keep up with regular activities like payroll, buying inventory, or paying your suppliers. But you’re also prevented from investing or making capital purchases, as well.

Negative cash flow not only cripples your day-to-day operations, but your ability to grow, as well.

 Now that you understand the scope of the problem…

2. Incorporate Healthier Cash Flow Habits Into Your Routine

Making good habits a part of your daily routine helps you get a great night’s sleep. Consider cash flow forecasting and calculating actual cash flow as integral to your day as your morning coffee or workout.

Cash flow forecasting allows you to project different cash flow situations depending on all of your variable inputs and outputs. Will you be able to pay XYZ Supplier on Friday? What if ABC Client doesn’t pay by then?

Cash flow calculations then allow you to see where you stand at any given point, or over a specific date range.

Staying on top of your cash flow–both projected and actual–allows you to predict and quickly respond to negative cash flow. But what’s your response going to be?

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3. Sleep On It & Consider Your Options

Your goal is to turn the tide and get into a position of positive, healthy cash flow on an ongoing basis. Which potential cash flow solution is going to work for you?

• Take out a loan. You could take out a loan from the bank or a private source. Of course, it’s going to be pretty difficult to convince a bank to lend you money when you’re already experiencing negative cash flow. Further, it’s a short term fix that doesn’t address the underlying issues that cause negative cash flow in the first place.

• Cut your expenses. As a small business, your costs are likely already as slim as you can afford for them to be. Reducing payroll, downgrading product or service inputs or even increasing prices can all create greater cash flow, but at what expense? If your cost-cutting activities harm your company’s reputation or ability to provide a great product or service, you’re no further ahead.

• Sell investments or equipment. You can inject quick cash into your business by selling off a valuable asset, like an investment or a piece of valuable equipment. What does this do to your business in the long run, though?

• Use an alternative financing solution like invoice factoring. Sometimes also known as invoice funding, this cash flow solution offers both short and long term benefits. Invoice factoring gives you that quick injection of cash based on your outstanding invoices, so you aren’t creating new debt. You don’t have to satisfy rigorous financial and credit checks as you do with a bank loan or VC funding. Invoice factoring on a regular basis creates a history of positive cash flow that can benefit your company in future, without the sacrifice of giving up capital assets or investments.

Once you have a cash flow strategy in place and are forecasting on a regular basis, you’re in position to respond quickly when negative cash flow occurs. Sleep easy! With your cash flow under control, you’re en route to healthy growth and developing a solid financial track record for your fledgling business.

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