We all know the overriding concept of business success: you bring in more money than you spend. Easy, right? But if you’ve been in business for a while, you’ve probably seen that there’s more to it than making sure your end-of-year totals are good. To succeed—or even just survive—you’ve got to manage cash flow, every day.
Cash flow can make or break your business. Even good businesses fail when they run out of cash. Even if they’re bringing in money. Even if they’ve driven costs down. Even if it’s only a short-term problem.
Maxwell Money focuses on helping businesses manage their cash flow so that they can stay afloat, even when dealing with fast growth or sudden slowdowns.
There are three basic types of cashflow in a business: investing, financing, and operating cashflow. You don’t need our help with the first two, because they’re relatively simple. Cash from investing is money that comes in as equity by the owners, cash used to buy assets, or assets sold to create cash. Cash from financing is a bank loan or other debt. But the final category, operating cash, is much more complex and dynamic than the previous two.
The success of your business depends on close, day-by-day management of operating cash.
At Maxwell Money, we keep a close and constant watch over our business clients’ balance sheets, managing their operating cash to help ensure the business always has the cash it needs to keep the lights on. We do that by ensuring clients get paid faster, making payments as slowly as possible, and reducing cash tied up in inventory.
Get Paid Quicker
We’re always looking to speed up the time it takes your customers to pay you what they owe.
- We can work with you to set expectations of how quickly you need to be paid, especially if you’ve incurred upfront costs on their behalf.
- We never sit on invoices: the moment you tell us we can invoice, we do it, to minimize any lag.
- We also offer options that facilitate faster payments, minimizing the delay between customers’ sending your payment and its arrival in your bank account.
- And we manage your receivables proactively, following up on overdue invoices and making sure that payments are posted to your accounts ASAP.
Pay suppliers and vendors efficiently
On the other side of the balance sheet, we know how to maximize the amount of time before your cash flows out. We strategically leverage credit cards, stretch out discount periods, and negotiate longer payment terms with suppliers.
Inventory can tie up cash when you need it to flow, so we work with you to optimize your inventory management. We’ll help you shop around for the best prices and negotiate for discounts. We can reduce the amount of cash tied up in inventory by figuring out how to place smaller, more frequent orders without incurring increased shipping costs. We help you decide when and how to sell obsolete inventory, and how to track it so that you have exactly what you need, when you need it.
Measure, monitor, and strategize
We put these strategies to work for our clients and check how they’re doing with constant measuring and monitoring. We track our business clients’ receivable days, inventory turnover and payable terms. With our years of experience, we’ve developed rules of thumb to spot potential problems early on. For example, operating cash flow should be greater than profits as you leverage your initial investments, so we’ll alert you to the potential danger if it drops below that point. It should also grow faster than profits, so again, we’ll let you know if that’s not happening.
There’s no single, simple strategy to protect your business from the challenges of cash flow. But there are a wealth of techniques and best practices that we can leverage to manage cash flow and reduce your risk.
Talk to Maxwell Money. We can help you keep cash flowing in the right direction when we’ve got your books.