Cash Flow is the life blood of any business. It pays the bills and is the primary focus for any finance application. In recent times businesses have experienced some exceptional growth, but it is still possible to go broke when your business is growing and making a profit, if you run out of cash.
There are essentially 5 “levers” that a business has available to it when caught in this predicament. Some are are more effective than others.
- Reduce Inventory
- Collect debts faster
- Reduce Costs
- Increase Unit Price (not volume)
- Pay Suppliers slower
The appropriate levers are different for every business. For some when cash flow is tight, supplier relationships become strained and costs increase, which only makes the problem worse. Likewise for other businesses, increasing unit prices is just not an option in the competitive market place in which they participate. In this situation a business needs to get creative in coming up with strategies that break the cycle.
Often too, this is a time when you most need your bank, and this is the time when you are least attractive to banks.
Luckily there is help available. Our Commercial Finance Adviosors can help you explore the strategic options available to you. Our Commercial Finance Advisors can assist you to understand the options that you have and help you to plan your way out of the predicament that you find yourself in.