IN Small Business

by Alison L. Burns

Overcoming the Challenges

GIVEN THAT THIS is the annual insurance, financial, and banking issue, and in light of one of the biggest financial events that some of us will ever experience for our businesses, it only seems appropriate to talk about overcoming the top financial challenges that businesses face.

LACK OF CASH FLOW. Without cash, you have no business. After all, cash is king. Cash flows out; cash flows in. And you need both to maintain business. So how do you balance both? The answer lies in experimenting with payables and receivables. As consumers and payment trends evolve, it is wise to re-evaluate your business processes to maximize all your cash.

The list of payables questions can be endless: What payables can you stretch out without penalties? How far will they stretch? Can you combine vendors for costsavings? Are you stretching some bills out so far that you have late payment fees? Do you have business insurance? Is it the right coverage for your industry and needs?

And for receivables: How quickly are you getting paid on your receivables? Are you giving customers too long to pay? Are you not giving them long enough? Are there a lot of receivables in collections? What does that cost? How can you make the cost of receivables lower and have customers pay in a shorter amount of time? Do you have a streamlined payments process for customer receivables?

Sitting down to strategically map this out and brainstorm other ways of doing things can help with both outflow and inflow of cash, which plays right into…

BUDGETING. Creating and sticking to a budget is key to running a clean operation with steady cash flow. Personally, when I did this for my business years ago, it was a game changer. I know down to the dollar what I spend on everything from salaries to our water cooler man. And I revisit it several times a month to compare to what is debited out of the operating account. If there is $5 fluctuation, I am asking questions. Budgeting fixed costs also aids in salary and bonus projections, commission amounts, and sales quotas. This is truly the brains of the business and helps guide every other decision.

LACK OF CAPITAL. To grow your business, you need a healthy amount of capital for things like marketing. If you do not yet have this, I strongly recommend

two things: starting a business savings account and getting a line of credit (also called LOC). One of the highest interestbearing savings accounts out there is an American Express savings account, and you can link it to virtually any bank you want. Did I mention it is free? For the line of credit, your best relationship for this will be through your current bank that holds your business accounts. LOCs can be expensive money when you need to tap into it, so this should be used sparingly, but it is a great asset to have in a pinch and provide peace of mind.

UNFORESEEN EXPENSES. This one is scary, because it is such an unknown and could potentially affect our entire livelihoods. That being said, this is why it is critical to have savings as well as access to other capital. This is also a huge reason why business insurance is so crucial. It will protect your business in the event of a breach or major claim.

This is certainly the year of uncertainty, but we can help make it less stressful by putting these measures in place. To talk more on anything here, shoot me an email at aburns@precisionpaymentsystems.com.

Long live small business!