We are often asked, “How do your chief financial officer services help us get cash?”
The most common answer is through a more efficient relationship with the bank. Banks lend money based on the ability to repay. When your financial records, including a cash forecast, demonstrate that you are in control of your business (and it is not controlling you) the bank is more inclined to support your requests. So the first step in getting more cash is to improve the quality, accuracy and timeliness of your financial statements.
Do you know how much cash to ask for? Is your line of credit at the right level? Have you reviewed your cash forecast to ensure that when you will need cash you’ll have access to it? Your B2B CFO® business financial advisor can help you assess your needs so you can ask for a line that will truly benefit you when it is needed. The time to negotiate the line of credit is prior to needing the cash. If you wait until you are out of cash and cannot purchase enough inventory for your big selling season, you might be limiting your sales for the year and future years.
Often, business owners are not clear on what to finance. If you use operating cash to pay for capital equipment, then you don’t have cash for operations. If you then use your line of credit to support operations, you might be paying more for that cash than if you had financed the capital equipment acquisition.
Your B2B CFO® business financial advisor provides small business financial consulting. As such, each partner has an extensive network of service providers. Based on these relationships, if your bank is not interested or willing to support your needs, your B2B CFO® business financial consulting partner can introduce you to other bankers or alternative financing sources.
Speaking of alternative financing sources, bear in mind that banks are one source of cash, and often the best. However, there are times when equity financing might be called for. Your B2B CFO® partner can connect you with investment bankers if they are what you need. Occasionally, the situation calls for non-bankable funding. An example might be an advance against a large government contract or major purchase order. Your B2B CFO® advisor can introduce you to their network of alternative financing professionals.
Sometimes our business financial consulting services can help you get cash right from your own business. When sales have increased but cash hasn’t, your B2B CFO® partner will dig into the financials to see if there is something you can do internally to improve your cash flow. Have your receivables grown disproportionately to your sales? If so, you are losing cash.
Is your inventory turning over commensurate to others in your industry? If not, you are losing cash. Are you maximizing terms on your payables? If not, you are giving away cash. Are you paying down your line of credit when you have cash? If not, you are giving away cash.
Are you utilizing the appropriate types of accounts at your bank to maximize your cash? If you process large volumes of cash, do you use sweep accounts to earn interest? Do you have the right credit card processing products to minimize your costs of processing? If not, you are losing cash.
Are your vendor terms reasonable? Can they be negotiated? Are you using volume discounts? These are questions your B2B CFO® business financial advisor will evaluate and help you answer.
Another area to review is costs relative to others in your industry. Your B2B CFO® partner can compare your performance to others in the country and in your region. Are your personnel costs higher than the industry average? Is your gross margin in line with others? Knowing where you stand compared to others gives you guidelines and helps focus your attention to improve your own cash situation.
While these are a few ideas about how We Help You Get Cash, there is one more important point to consider before utilizing our chief financial officer services. We want you to understand the importance of cash in your business. We want you to “Get It.”. Cash is the ball. If you take your eye off the ball, the ball will disappear. Get It?