In a turbulent economy, your business needs cash to pay its bills. Cash is needed to implement growth plans and take advantage of business opportunities.
Here are some steps to maintain your company’s liquidity:
- Determine if your company is profitable. Get your bookkeeping and financial planning systems in shape so you immediately know the financial status of your business.
- If your company is not profitable, change what you are doing. Having good financial information is worthless if you do not use the information to correct problems and improve the business profitability structure.
- Reduce Unnecessary Assets. Are you wasting assets in land, fixtures and unnecessary assets instead of focusing assets on those needed for your core business?
- Get Deposits. Get deposits and retainers from customers at the beginning when it is easiest rather than chasing after customers for payment.
- Monitor Accounts Receivable. Don’t let customers get ahead of you. In times of economic uncertainty, your customer’s bankruptcy and business collapse could cause your business to fail.
- Check Credit. Find out your customer’s credit standing. If their credit is challenged, get a larger deposit and consider C.O.D.
- Negotiate longer payment terms with suppliers. If your suppliers will wait longer, you need less cash and credit lines to grow your business.
- Analyze Overhead. Reduce overhead costs such as rent, utilities, auto, transportation, office supplies and equipment and unnecessary staff.
- Take advantage of Discounts. Advance payment, quantity discounts, avoiding last minute travel tickets, can save money.