Cash Flow Management

[1] Because we’re talking cash flow management today… with a recession looming on the horizon and the effects of inflation being felt so hard in everyday life, it’s difficult not to freak out over what lies ahead for your San Francisco Bay Area small business.  But, some think a recession might not be all that bad for small businesses… even helpful. While that remains to be seen, one thing I can say is, don’t panic. There is a way forward – when you have a plan and good advice along the way. If you’re not able to see the path forward through the muck of it all, or you just need a little more support and guidance — I suggest grabbing a time with us and our team. That’s what we’re here for.Patti (408) 775-7790   Gale 408-775-7800 Now, one thing that you want to pay extra close attention to when lows strike is what’s happening within your cash flow. Knowing where it’s at, plus figuring out how to make it last, especially if you’re in a seasonal business (we understand that kind of reality), well, this sometimes takes some specially-devoted effort and planning. Many business owners avoid this and prefer to “wing it” … and occasionally to disastrous results. So that’s what I want to jump into today…  Alleviating Cash Flow Management Pains for San Francisco Bay Area Businesses“Standards are always out of date. That’s what makes them standards.” – Alan Bennett You love your business and you love when cash flow management goes smoothly. Who doesn’t? But if your company is seasonable, a steady income can be hard to come by.  Boy, we hear you. We’re accountants, and the weeks after Tax Day can be slow. I remember feeling horrible that my family suffered so much because my industry happened to trail off for a while after people finished filing their taxes.  As a San Francisco Bay Area business owner, financial lows usually hit you the most. You probably dig into your profit and take-home pay to make sure your employees and operations don’t hurt (especially these days). That’s only natural – and responsible of you.  But you can fight the unpredictability of seasonal cash flow, smoothing out those highs and lows. We can help you ease the pain. Here’s how.   Your initial questions Cash flow management is all about details. You know more about tackling this problem than you think. You’ve got three good tools right off: your company’s records, your experience in your industry, and your common sense.  Even if you don’t have an official profit-and-loss statement, you probably have a trove of recorded info about your business. Look at your past few seasonable ups and downs. Any stand out? What happened in those periods? That could give you a good idea of what to repeat – or avoid.  What are the cycles of your company and industry? What factors like weather or the local economy impact your business? What can you predict is coming down the pike? This can give you a better idea of how much to budget and how far out to plan.  Are your income sources sustainable? During your busy season, make sure you get paid as fast as possible: Send double-checked invoices to clients as soon as you’ve completed the work, don’t be shy about reminders, and give them a clear deadline for payment – smoothing year-round cash flow is one thing, but you don’t want customers’ unpaid bills spilling into your off-season.  Look at your expenses, too. Are your biggest ones justified? Are there ways to reduce them? Regarding biz real estate, some landlords might be open to you paying more rent in the busy season and less in the slow times. If you own your business property, can you rent it out during the off-season?  Year-round strategies We all know about saving for a rainy day. Your off-season isn’t rainy, exactly, but it’s close enough. Set aside a percentage of your high-season profits for the downtimes – and be disciplined about it. (We’d be happy to talk you through more details of this idea.)  Try off-season work that dovetails with your primary business. Accountants offer financial advising, for example, during those months when people aren’t filing tax returns. Let’s say you’re a landscaper or a pool maintenance company working hard in the warm months. Consider snow removal or a similar winter business to bring in a little cash and keep your name in front of customers.  While we’re on the subject, smart and constant marketing is the best way to keep the pipeline flowing. Do your competitors hibernate off-season? Then market when they don’t. Work up a list of your anchor clients and pitch them with deals for early registration for your high-season services. Offer them this year’s price on a few items if they register early for next year – in the middle of our terrible inflation, they’re sure to notice that. Upsell them on other items if you have to, and constantly ask for referrals. In accounting, we use social media and e-newsletters off-season a lot. Give us a buzz and we can talk about this strategy.  Prep work A lot of businesses would love to have a slow time to work carefully on improving their operation and bottom line. This breather has landed in your lap. Go over those budgeting items we mentioned, then go over them again.  Take time to study your business and the money that makes it go. What procedures have you always wanted to improve? Satisfied that you take all the payment methods you need (these evolve all the time, you know …)?  One huge part of prepping for your busy season is finding the right workers (some accounting firms start looking for tax-time help the fallbefore). You’ve got time to look for the right people – again, don’t forget referrals – and to fine-tune or expand your training.  If you’ve got a solid bank of temporary staffers from the previous season, think about honing them. Who deserves a