5 Steps to Better Cash Flow in 2017
By Brian Rogers
As an advocate for small businesses, we believe in the longevity of them. As we look to the new year, we can start taking the necessary steps to empower these companies with the financial tools to be successful and to sustain throughout 2017. Additionally, small businesses have long been the lifeblood of the U.S. economy, but getting a line of credit or a loan to start one can be difficult. Once you have overcome the hurdle of starting your business, maintaining and growing it requires cold hard cash.
You had the guts to start your own business, now let’s learn how to manage cash flow in 2017 to keep (or get) the momentum going.
1. Keep Growing
No matter your cash situation, you can’t afford to stop growing. Spend your time thinking about how you can focus your attention on growing the most profitable piece of your business, and your cash flow problems will be a thing of the past in the new year.
2. Be Bank Savvy
All of the largest banks are competing for your business, but be smart about who you choose to handle your banking needs. It’s easy to get lost in the shuffle of large banks. When it comes to managing your company’s cash flow, easy access and online platforms are critical, so choose a bank with the right amount of technology to keep you nimble. A number of banks offer a solid technology platform.
3. Get Creative
Everything in business is negotiable – even your payment terms. If you’re selling your product or service on payment terms, which most business-to-business companies do, work with your customers to offer payment discounts in exchange for early payoffs. We function this way at NovaMed Suppliers, LLC. Additionally, you can request a deposit to get some cash in the bank even before you start. You’ll be surprised at the answers you get when you muster up the courage to ask your customers about how they pay.
4. Keep It Simple
When it comes to cash flow, keep it simple with your own tool to measure cash on hand, bills to be paid and ending cash. Throw in your collections for the next day and voila – you’ve got a simple tool to use to take the anxiety out of cash planning. Your tool of choice can be as simple as an Excel spreadsheet starting with beginning cash. You can then subtract all outgoing payments from the current cycle. Once that cycle is complete, you will have your new cash on hand. Since every business is different, use a cash flow tool unique to your own business needs.
5. Plan, plan and plan some more
Working hard in your business is one thing, but working on your business is much more important. Make time to review your cash flow daily, and develop a clear plan for the best use of it every day. Not only is reviewing your cash flow important, but you must also consider vendors. Vendors should be paid by priority. For example, if you have product on hold waiting for payment for your largest customer, you should pay them first. A clear plan includes who is going to be paid and when. Each vendor should have an assigned date for payment after you review your cash flow.
Be sure that you are using cash wisely. As a small business, cash is one of your greatest assets, and the future of your business depends on managing it effectively.
Brian Rogers is a guest blogger this month for M3 and is providing financial advice based on experience and expertise. Brian is the co-founder and chief financial officer of NovaMed Suppliers, LLC, an Atlanta-based distributor of healthcare products. As an advocate for small businesses and an earned MBA degree from the Clark Atlanta University School of Business and a BA in political science from Morehouse College, Brian spends a great deal of his time consulting businesses on how to win financially. He currently resides in Atlanta, Georgia with his wife Sharickah and their son.