One of the many benefits of running our ACE Peer Group Program and also working in the weeds at Grunder Landscaping Co. is that I am able to see trends in what challenges companies are facing. While Spring always puts companies into a bit of a cash crunch, this year it's been tighter than usual for a lot of the companies I work with.
Since it's an issue I know many companies are facing, this week I'm sharing four tactics companies can use to lessen the impact of cash flow issues:
Use credit cards for company expenses. Embracing credit cards for business expenses offers a ton of advantages. It extends your payment window by approximately 30 days, providing a valuable buffer for cash flow management while accumulating rewards points and enhancing fraud protection measures. Additionally, distributing purchasing authority across your team (with spending limits), fosters operational efficiency.
To use these smartly, don't rely on them for long-term financing and make sure you are paying the balances in full each month to avoid interest charges.
Accept credit card and ACH payments from clients. These payment methods streamline transactions for clients which expedites cash flow. You will have to pay the nominal transaction fees, but getting paid faster usually makes this worth it.
Who owns collections? Designating an individual to oversee collections brings positive accountability and accelerates cash recovery. Bring the delinquent payers up in team meetings so everyone knows that they are responsible for being part of the team that helps collect.
Anticipate future cash needs. Addressing cash flow challenges preemptively is key to healthy cash management. Engage in proactive dialogue with your banking partner to better cash positions. How can you do this tactically? Get in the habit of generating a two-week cash forecast, encompassing payroll obligations, credit card liabilities, anticipated receivables, payables, and incoming deposits and known recurring payments.
Nothing solves cash flow like selling more work and getting it done – fast! These mechanisms should drive the process of cash improvements, but don’t lose sight of what matters most: selling more work! If your topline revenue isn't on track for 2024, join us on May 8-9 for Virtual Sales Bootcamp 2.0. We'll give you ideas and tricks to better manage sales so you can finish the year strong.
| Vince Torchia Vice President The Grow Group |
Director of Strategy Grunder Landscaping Co. |