YOUR BUSINESS ALLY
Cash Crunch Survival Guide - Part 1:
Expert Advice for Cash-Strapped Businesses
Is your business facing a cash crunch?
We'll help you navigate the most difficult of financial challenges, and guide you back to solid ground.
This is Part One of our Cash Crunch Survival Guide:
Visit Part Two: Cost-Cutting Ideas
Visit Part Three: Funding, Debt & Tax
The Meeting
I still remember the day Brandon walked into my office. A businessman, his face etched with worry.
He looked like he had the weight of the world on his shoulders, and as he sank into the chair opposite my desk, he wore the expression of a man seeking hope in a hopeless situation.
I've been a Chartered Professional Accountant for more than three decades, and throughout these years, I've seen many clients with unique problems and concerns. This man, however, radiated a sense of urgency that had become all too familiar to me. His business was suffering a cash crunch, and he was desperately looking for a lifeline.
"Phil," he began, his voice strained, "I'm really not sure where things went wrong. The cash flow, it's just … it's just not there anymore."
In times like these, I know my role goes beyond just crunching numbers. It's about offering a supportive ear, a reassuring voice, and, most importantly, practical advice to help my clients navigate their financial hurdles.
I listened attentively as he painted a picture of his business: the successes, the challenges, and now, the daunting cash crisis. I could see the worry in his features and the fear in his eyes. But, beneath it all, I also saw a determined will to fight back and turn things around.
And so, as he finished his story, I leaned back in my chair and said:
"Every business faces its share of ups and downs, but it's quick action and resilience that will tide you through.
The key lies in stop-gap measures that give you time to breathe.
Then, understanding your cash flow, improving cash management, and navigating back to a cash-positive situation."
Over the following hours, we dove deep into Brandon's business finances.
We discussed cost-cutting strategies that would't compromise on quality, negotiating favourable payment terms with suppliers, and incentivizing early customer payments. We explored alternative financing options and talked about how inventory optimization could significantly improve his cash flow.
As we discussed each tactic, I could see a glimmer of hope sparking in his eyes, replacing the black cloud that had accompanied him into my office.
When he left my office that day, he was not the same man who had walked in. His fear was replaced with a sense of resolve, his desperation with a workable plan of action.
Cash flow management is a science, and mastering it can be instrumental to your small business's survival and success.
As an accountant, my role is not just to crunch numbers, but to offer the advice and insights necessary to navigate stressful financial challenges. To ensure that every business, big or small, is equipped to survive a cash crunch and thrive despite it.
Brandon was a reminder of why we do what we do - provide a guiding hand during turbulent times and help businesses grow and thrive.
Let Zenally Help You Dig Out of Your Cash Crunch
We've helped many a business out of a tight spot.
Every successful business in Alberta started with a dream. Maybe yours didn't start with a disciplined approach to financial management. Or, maybe you've come to a bump in the road no one could have predicted.
No matter, our CPAs can give you the insight and sound advice you need to dig out of the crunch.
No shame. No blame.
Just an experienced helping hand to get you back on track.
Cash Flow Tips: Ensuring Your Small Business Thrives
Managing cash flow effectively is crucial to small business success.
Remember, financing your sales successes can catch you unawares, just as much as a slow-down.
It's not just about profitability but about knowing when money is coming in, where it's coming from, and how it's being spent.
The following cash flow tactics can help small business owners in Alberta thrive, even in the face of financial challenges.
Implement Cost-Cutting Measures Without Compromising Quality
The first step to better cash flow management is to look at your current costs. Identify areas where you can reduce expenditures without compromising the quality of your goods or services. This could involve negotiating better rates with vendors, streamlining processes to enhance efficiency, or utilizing energy-saving practices to reduce utility costs.
Remember, while it's important to keep costs low, maintaining the quality of your products or services is paramount. Cost-cutting should never result in a diminished customer experience.
Negotiate Favorable Payment Terms with Suppliers
Do negotiate with your suppliers. Extending the timeframe to pay your bills can free up cash and create more financial flexibility. You could also explore opportunities for volume discounts or early payment discounts with suppliers.
Just remember, it's important to maintain strong relationships with your suppliers. So, any negotiation should aim for terms that benefit both parties.
Encourage Early Customer Payments with Incentives
Late payments on receivables can put a real strain on your cash flow.
One way to get around this is by encouraging early payments from your customers. This could involve offering discounts for payments made within a certain period or providing other incentives like additional services or freebies.
These small incentives can motivate customers to pay earlier, helping you get a better handle on your cash flow.
One way to implement this is to set your prices at a profitable rate with terms of net 30. Then offer a 5% discount for payment in 7 days. You might need to adjust your pricing, but this will strongly motivate customers.
Explore Alternative Financing Options
Alternative financing options can also help improve your cash flow. This could involve a small business line of credit, invoice financing, or even crowdfunding. These methods can provide a financial cushion and give you more control over your cash flow.
Remember to do your due diligence and understand the terms and costs associated with any form of financing. It's always a good idea to consult with one of Zenally's CPAs to explore the best options for your unique business situation.
Manage Inventory Levels to Optimize Cash Flow
Effective inventory management is critical for businesses with physical products. Too much inventory ties up cash and increases storage costs.Too little inventory can lead to lost sales and unsatisfied customers.
An inventory management system can help you keep optimal stock levels, reduce storage costs and ensure you meet customer demand. Regularly review your inventory turnover to gain insight into what's selling and what isn't. Then you can make better-informed purchase decisions.
Zenally's consulting, coaching, and advisory services are offered all over Central Alberta, from our offices in Red Deer and Innisfail.
This makes for an easy commute from locations like Sylvan Lake, Blackfalds, Ponoka, Lacombe, Olds, or Sundre. We also provide services remotely.
Are you in the throes of a cash crunch?
Contact Zenally for expert advice
It could make the difference between merely surviving and positively thriving
Part Two: Cost-Cutting Ideas Part Three: Funding, Debt & Tax
Business and Tax Advice
for Alberta's small businesses owners
from Albertan small business owners
Your Business Ally
Phil Cruickshank
Phil is a Partner at the business accounting firm of Zenally Chartered Professional Accountants LLP.
For more than 30 years, he has sat face-to-face with owners of businesses of all sizes. He has listened to them, helped them identify their issues, and provided guidance.
Business owners have left with answers to their questions, less stress moving forward, and confidence that they have a business ally to call on anytime they need.
Interested in finding out more about Phil, his team and what they can do for your business? Check them out at zenally.cpa.
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Chartered Professional Accountants LLP
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