Is This Your Situation - Poor Cash Flow?

Contrary to popular opinion, profits are not the pulse of business. You can't spend profits. Most companies go out of business because they lack quality cash flow — not because they lack profits or assets.

So what should you do? Keep in mind that you must see the situation as a WAR. There are many battle fronts and many issues. If aren't victorious … you're out of business.

Here are some ideas to help you win the cash flow war:

1. Develop a written plan to increase cash flow.
  • Involve your staff in ideas.
  • Engage our firm to prepare the plan or facilitate the process.
  • Have specific action plans and due dates for all items.

2. Examine inventory levels – think of inventory as cash in a warehouse.
  • Get rid of obsolete items.
  • Have a fire sale.
  • Figure out how to reduce inventory levels and maintain in-stock rates.

3. Examine credit and collection procedures.

4. Examine billing practices – you can't collect until it's billed.
  • Create an objective to reduce the number of days in the billing cycle.

5. Negotiate with creditors – get better terms.
  • You'll be amazed at what creditors are willing to do if you ask and they understand the issues.

6. Examine staffing levels, compensation plans, and bonus plans.

7. Review all fringe benefit programs.

8. Prepare detailed cash projections with "What If?" analysis.

These are only some possible solutions. The issues are complex and must be acted on with a deliberate systems approach. For some companies, it may even be advisable to consider bankruptcy.

We can help in many of these areas. Contact us for guidance.

Don't wait until it's too late.