There isn’t a business owner who doesn’t want to maximize cash flow. But managing cash flow is hard. You don’t know what you should be paying attention to. You’re not sure if the decisions you’re making are helping or hurting.
I get it. So, it’s time for some ugly truth about cash flow.
Your business has 3 distinct cycles.
- Sales cycle
- Delivery cycle
- Billing and Payment cycle
If you own a manufacturing business, you have an additional cycle, production.
There are 3 ways you can increase cash flow in each cycle:
- Shorten cycle times
- Eliminate mistakes
- Improve your business model
Here’s how some of these might work:
Shortening cycle times might be focusing on how to sell faster. If it takes a client on average 45 days to decide to do business with you and you could shorten that to 40 days, you could sell 12% more. If a salesperson is looking for prospects in the wrong place or not qualifying them well, those could be examples of mistakes. Using SEO to rank for keywords could be an improvement to your business model.
Eliminating mistakes. I have a contractor client that says, “we only get paid for the job once.” If that same contractor could complete his schedule in 10% less time by eliminating mistakes, they could potentially use that time to increase revenue from other contracts. Many contractors are using technology to update job costs from the field on a daily basis to manage profitability.
Billing and Payment Cycle
Many clients bill monthly. I have a client that bills twice a month, shortening their cycle time by two weeks. Do you have clients that catch mistakes on invoices? If so, adopt a system to review invoices before sending. ACH gets money in your bank account next day versus waiting for the mail and deposit the next day. Using technology to get money in the bank faster improves your business model.
Don’t try to do this alone. It can be overwhelming to know if you’re making the best decisions for the financial future of your business. Find the right person to help you devise and execute a plan that focuses on the areas that will accelerate financial growth. Stop the frustration of running into roadblocks and not knowing how to get around them. Call me today to get started, 770-597-3136.