Insight: Making Your Clash Flow
In numerous conversations that CR Editor Maureen Jenson and I have had with custom retailers and integrators, cash flow is one of the most common recurring topics.
Although virtually everyone is being affected by the lack of consumer confidence and the market uncertainties, some dealers are able to manage their cash flow better than others...
How do you manage cash flow in uncertain times, when sales are not growing, and you are struggling each month to pay the bills?
Here are some ways to improve cash flow and deal with the uncertain climate brought on by the downturn in the economy:
1. Cash Flow Chart
Your first step is to have a cash flow chart. This list can be simply a column on the left and a column on the right detailing all your cash coming in and all your cash going out. The list should be very comprehensive, detailing virtually all outgoing dollars. On the cash “in” side, be extremely realistic. Don’t project cash coming in from unrealistic sales levels or from the payment of receivables that are clearly uncollectable.
This chart should be updated weekly as a reflection of business that has occurred and the payments due for vendors, rent, insurance, payroll, etc.
With the cash flow chart in hand, you need to identify those items where payments can be delayed, cancelled or adjusted.
Examples of some of these items are:
2. Insurance is traditionally a high cost. Try paying less more often. Many policies will accept payments monthly if you use an automatic payment system. There is usually no increase in cost for this payment schedule.
3. Look at your deductibles for autos and business. You can usually lower your insurance cost by increasing your deductibles. I know of one business owner who increased his deductibles. His savings was half of the deductible amount. This meant that after two years of no claims, he was paying less, even if he had to pay the deductible in the future.