Five Top Strategies to Optimize Cash Flow As Your Business Recovers From the Pandemic

Many business owners try and tackle their financial situation alone with the notion that they’re saving money. The truth is, hiring a team of financial experts can actually save you more money than the fees of its respective members.  Adding a CFO and/or Cash Flow Strategist to your financial team, is an investment that owners will reap rewards from long into the future. A business is only as strong as its cash flow. Becoming proactive in creating strategies to help you not run out of your PPP money, is the goal to recover strong out of the pandemic!

From my own experiences, most business owners are spending money as fast as it is coming in and then some.  Being accountable and aware of your business spending is the most important step towards finding solutions towards money woes. What were your money habits going into the Pandemic?  Did you already have a cash flow problem and were “saved” by the PPP gifts and EIDL Loans?  Have you taken the time and put forth the energy in rebuilding a more solid financial foundation?

Spring is upon us! Let May be the month that you plant the seeds to a good financial garden and begin to watch it grow.  Centennial Revenue Management wants to help you get off to a good start! Take advantage of the Spring SWOT Analysis Package – strengths, weaknesses, opportunities and threats. This snap shot will help you to plant the financial seeds to build a strong financial foundation.  Click here to learn more about that offering:

Now that you are sitting on more money in your bank accounts then ever before, what will you do to ensure and empower yourself that you will not run out of money by the end of this year?  The Dirty Little Secret about Cash Flow is that it’s not about the next 30 or even 60 days from now.  The sweet spot is 90 to 120 days out to see if you are brewing a cash flow storm or will already be in one!

Top 5 Strategies that I highly recommend paying attention to when creating a plan in the very near future.

  1.  Bring Outside Eyes to your Financial Arena:  Take the time and consider investing your money into a cash flow expert that can identify the top money habits that you can change to get a better outcome with managing cash flow.  If you went into the Pandemic with a cash flow problem or already struggling with cash flow; it’s more than likely you will come out of the Pandemic with the same cash flow problem.  It will just take a longer time to spend the cash reserves that you have stashed from all the loans the government gifted you!
  2. Identify what your Average Monthly Revenues are each month:  To determine this number, I recommend using a 4-month trend taking the total of CASH revenues (not accrual) and divide by 4 months.  This will tell you a starting place of what your monthly revenues are likely to be in the months ahead.
  3. Next up; Identify your Average Monthly CASH Outlay:  To determine this number, you need to look at both the Profit and Loss and Balance Sheet.  On the P&L, I also recommend looking at the total of 4 months of Expenses on a CASH basis and divide by 4 to get an average monthly amount for each expense line. PLUS, you need to look at the Balance Sheet and determine the monthly amount of debt servicing and Owner Draws/Dividends that are being posted.  The total amount will get you close to understanding what your Average OUTLAY of cash is each month.
  4. Implement an Accounts Receivable Process:  This is money that you have earned but have not yet collected.  Anything over 45 days outstanding is “low hanging” fruit in the cash flow arena and should be aggressively pursued to collect from your clients.  First step in implanting a process is to assign an “owner” on your team to make client relation calls and send monthly statements asking for money owed.
  5. Implement an Accounts Payable Process:  This is money going out that you want to slow down and control how you pay your vendors.  I’m not suggesting that you violate payment terms.  I am suggesting that you have your bookkeeper enter vendor invoices into your accounting system and then pay on a weekly or bi-monthly process.  Big picture, you want to collect as much of your accounts receivable as possible, make payroll, pay vendors and service debt with you being empowered by the timing letting money go out of your bank accounts!

Moving into a new normal will take creating some proactive strategies!  Partnering with a cash flow expert can help to empower you to hold onto your cash reserves.  What if you could learn to manage the outflow of money against your revenue trends and make a profit and optimize cash flow?  Take back financial control and learn how to be proactive by scheduling a complimentary consultation with me at the number below.

The goal is to focus on optimizing cash flow and to educate you on what your minimum cash on hand balances need to be to sustain your business in the months ahead.

***

Centennial Revenue Management is here to help by creating proactive strategies, identify, and transform money habits to ensure you won’t run out of your money.  Contact Debra today at
drobinson@centennialrevenuemanagement.com or at 303-835-7992.