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As a business owner and keeper of your kingdom, one of the toughest and most persistent adversaries you encounter is Cash Flow.

The quickest lesson you learn as you manage your finances is that you either have enough to fortify your control or you don’t. Soon you may find yourself looking out over a kingdom turned sour. A treasonous Cash Flow leads an army of expenses to your gate, determined to lay siege to your business and roust you from your rightful throne. When Cash Flow challenges you, it forces you to make decisions that could jeopardize your success, lead to significant stress, and even damage your reputation with late payments and additional fees. You are held hostage by an out of control Cash Flow, unable to invest when and where you want to, burdened with anxiety, and striped of your ability to control your own destiny. Cash Flow is ruling your kingdom; you and your subjects (your employees) now bend to the will of a tyrant. The day you gain back control seems distant. But remember, you’re the true ruler of this kingdom; you have already overcome so much as a small business owner. With the right tools, an out of control cash flow stands no chance. Time to rally your troops and oust the imposter King! Here are a few tips that can help you regain control of your kingdom.

GET A BATTLE PLAN! 

Charging in without a plan of attack is treacherous. So what are you waiting for? Start with a detailed month-by-month budget and use it to create a cash flow plan that projects your cash needs in advance. Thus supplying you with the armory of weapons you’ll need to win every battle, large and small! This financial strategy protects you from getting caught off guard by any unexpected expenses and affords the resilience to pursue chance opportunities. Every banker will tell you it is much easier to get cash when you don’t need it, rather than when you do. A plan will allow you the financial flexibility you need to make the best decisions for your business. And maybe the greatest thing of all, you can finally get some restful sleep. Free from the dungeon at last! 

MONITOR YOUR CASH FLOW WEEKLY 

Yes, I said weekly. And no, this isn’t as simple as looking at the balance in your checking account. Understanding how and when money moves through your accounts, including payments to vendors, revenue deposits, collections, payroll, as well as a number of other factors is essential in learning how to dictate what cash you will need available at any given time. This is particularly important if you run seasonal businesses where you earn the bulk of your revenue during a small portion of the year. While delegating or outsourcing your accounting activities is the best choice for most small businesses, every owner needs to be reviewing the cash flow to make quick and effective business decisions. Additionally, monitoring your accounts will strengthen your ability to assess any employee theft risk (yes, it can happen to you!) and identify problems with customers or venders. No leader has ever tactfully won a battle without assiduously tracking the movement of forces both enemy and ally. Who knows, you might even find disloyalty lurking behind your own line of command.  

RECEIVE PAYMENTS AS EARLY AS POSSIBLE 

Collecting revenue from your customers as soon as possible helps in two major areas. First, It helps shorten your cash gap (the time interval between when you sell a product or service and when you have to pay the vendor for that same product or service), and second, it helps your business accumulate more value as you sell. Can you turn your product or service into a subscription where payments are made every month while ensuring an ongoing relationship with your customer? What about collecting a retainer, integrating prepayment policies or expanding your credit card acceptance policies? If your business is in an industry where providing a payment term is the norm, you can push the time frame closer by offering incentives for early payment. Collecting from clients sooner, rather than later, also helps reduce collection activities or non-payment.  Not to mention, it reduces your stress levels and that of your staff. With the troops well rested, we’re ready for action! 

USE CREDIT CARDS AS A STRATEGY, NOT A CRUTCH 

Most businesses fall in to one of three camps:  

  1. Absolutely no credit cards, no way! 
  2. Credit cards fund all of the company cash flow needs. However, finance charges quickly wrack-up, weighing down the company, and ultimately causing more cash flow issues. 
  3. Credit cards are used to pay normal intermittent expenses and each month (or within a couple of months) the cards are paid off. 

It’s camp number 3 that can be the best choice for most businesses. Credit cards have high finance charges, but they also give you a grace period before those charges begin, thus giving you FREE use of their money to fund your business.  If you have a good cash flow analysis and properly plan for the date your payment is due, you can benefit exponentially! 

BUILD A RELATIONSHIP WITH YOUR BANKER 

In fact, build a relationship with several bankers. I was a banker and worked in financial services for 15 years. Having a banker go to battle for you with the credit committee because she knows you, your business, and trusts that you can accomplish what you say, will go a long way toward getting you the line of credit or loan you need. Some things, however, are out of the banker’s control. Luckily, bankers are a close-knit group; where one bank might not be able to help you, another one will.  

You may find comfort believing that what matters most is what your business does – the products you sell, the services you provide and how you market – but running a successful business is really about the financial fundamentals. If all this financial talk is causing you to retreat, or if you are just sick of having to do it all yourself, call in the reinforcements at We Spark Growth! Our team of accountants and CFOs are waiting in the wings to shore up the fortress and pave the way for your growth. After all, behind every great ruler is a court of skilled subjects. The hard truth is that you can’t stay in business for long if you don’t have the funds to do it. Cash flow may be king for now, but you have the resources at the ready to keep him from ruling your kingdom. Go out and get your kingdom back.  

Trust us, victory is imminent.