Steps and Tips to Maintain Healthy Business Cash Flow During Inflation

Bob House, president of Bizbuysell, has written a great article in Inc. Magazine that addresses these important steps that will help you keep track of your cash flow. Keep a regular eye on your financial statements. Do you have enough cash on hand? Are you improving performance? Are your customers paying their invoices on time? Bob encourages business owners to be creative and innovative.

Step 1: Prepare a Cash Flow Analysis:
       Review Operating activities cash flow
(ARs, payroll, taxes, purchased supplies and asset depreciation)
       Review Financial activities cash flow
(Business loan payments and stocks to shareholders)
       Review Investment activities cash flow
(Includes money spent to buy or sell assets not related
to regular business operations: machinery, business
equipment or real estate)

Bob’s Tips to Raise Cash Flow
       Boost Your Accounts Receivables
(Follow up on unpaid invoices by creating payment plans
for late customers as well as incentives for on-time customers.)
Check Accounts Payable Terms
(Is there a grace period? Might revise terms.)
Reduce Expenses
(Eliminate and renegotiate)
Reassess Inventory
(Can bulk buying help?)
Reassess Prices
(Research your competition. Can you increase margins or
provide unique services?)
Lower Supply Chain Risks
(Diversify suppliers)
Optioning a Small Business Line of Credit

Step 2: Conduct a Profit and Loss Analysis          
       Review Sales over time
(Identify patterns or peaks)
       Review Sources of income
(Profitable sources vs. lower margin ones)
       Review Seasonality patterns
(When is demand high or low?)
       Review Cost of Goods Sold
(Is revenue going up with this?)
Review Net Income and Profit Margin
       (Net Income/Net Revenue x 100=Profit Margin)

Step 3: Know the Value of Your Business
Emerald Coast Business Intermediaries can help you with a Broker Opinion of Value or we can work with a third party independent valuation source. A valuation is not only important for an exit strategy, but it also serves as an important tool when working on growth strategies for your business.