300 Preston Avenue, Suite 205, Charlottesville, VA 22902

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Cash Flow Manipulation

Cash flow is simply keeping track of how much cash flows in and out of your business, and how much goes out. Having a spreadsheet (like Excel) or program (like Wave or Quickbooks) helps you know where you are, and what to expect for the upcoming months. For many, knowing cash flow and projected cash flow = ability to sleep at night!

Good news: there are several ways to gain cash (improve cash flow) if sales are down or flat, without putting outside cash into the business through loans or investments, listed below.

Prepayments

Many businesses pay up-front for products or raw materials, get the product to a customer, and then wait 30, 60 or even more than 90 days for payment. Some customers are willing to pay for all or part of the product up front, or upon receipt. Taking into consideration the relationship with the customer and what is standard in your industry, capturing cash flow through pre-payments or down payments can significantly boost your operating capital.

Credit Terms

We recommend negotiating credit with your suppliers to improve cash flow. This is where your suppliers give you 30, 60 (net 30, net 60) days to pay them, after you’ve received their goods or services, at no charge. If founders communicate a convincing business strategy and have a good reputation, credit terms may be granted. Credit terms are also received after a supplier “gets to know you” and values you as a customer. Consider asking for terms ranging from raw materials and products you will resell, to shipping, professional services, and even rent or utilities.  

Communicating your business strategy and traction well with key suppliers or support businesses may result in net terms. However, if payment does not occur within those terms, consequences can include the loss of the terms, financial penalties, and even the loss of the supplier.

Projecting Sales and Expenses

Tracking your sales and expenses by month and estimating the next 6 – 12 months is not only fun – but will generate a sales forecast that drives BUDGET COMPLIANCE. If set up right, your bank account or other software systems do most of this work for you! Cash is king. Cash flow projections make up the whole castle.

See ‘Strategic Alliances’ for other business to business capital considerations.

Cash flow is simply keeping track of how much cash comes into your business, and how much goes out. Having a spreadsheet (like Excel) or program (like Wave or Quickbooks) helps you know where you are, and what to expect for the upcoming months. For many, knowing cash flow and projected cash flow = ability to sleep at night!

Good news: there are several ways to improve cash flow if sales are down or flat, without putting outside cash into the business through loans or investments.