{"id":225702,"date":"2023-12-19T22:00:07","date_gmt":"2023-12-19T22:00:07","guid":{"rendered":"https:\/\/www.markperlbergcpa.com\/achieving-positive-cash-flow-for-your-atlanta-businesss-health\/"},"modified":"2024-01-09T19:54:49","modified_gmt":"2024-01-09T19:54:49","slug":"achieving-positive-cash-flow-for-your-atlanta-businesss-health","status":"publish","type":"post","link":"https:\/\/prosperlcpa.com\/blog\/2023\/12\/achieving-positive-cash-flow-for-your-atlanta-businesss-health\/","title":{"rendered":"Achieving Positive Cash Flow For Your Atlanta Business\u2019s Health"},"content":{"rendered":"
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Crazy to think there are only two more weeks until Christmas and only three more weeks left of 2023. There\u2019s a lot of joy still to be had and opportunities for your Atlanta business to increase revenue<\/span><\/p>\n

On the other side of that coin, though, rising costs and the Fed\u2019s interest rate hikes have made it extremely difficult for some businesses to stay afloat. <\/span><\/p>\n

Inflation alone has negatively affected the cash flow of <\/span>48 percent of small businesses<\/span><\/a> in the last six months nationwide. And businesses in some sectors are struggling to hold up to the challenge \u2014 <\/span>tech startups<\/span><\/a> are especially crumbling right now. Also, 40 percent of small businesses reported this year that limited or inconsistent cash flow was their top financial challenge.<\/span><\/p>\n

So if you would place yourself in that group, you\u2019re not alone.<\/span><\/p>\n

This is not a new problem historically, and the start of a new year is when businesses are typically thinking about how to fix it proactively. I\u2019ve watched many, many Fulton County businesses over the years struggle through the cash flow crunch, and some of them fail because of it. Inflation is only accentuating the battle for available funds to pay bills, make investments, and meet payroll.<\/span><\/p>\n

I\u2019ve shared many financial strategies to achieve positive cash flow with these struggling business owners over the years, and today I want to share some with you. If you want to discuss this more thoroughly in the context of your own books, set up a time to talk:<\/span>
https:\/\/calendly.com\/d\/46r-49m-93k\/10-minute-intro-call<\/a><\/strong><\/p>\n

Let\u2019s start here\u2026<\/span><\/p>\n

Achieving Positive Cash Flow For Your Atlanta Business\u2019s Health<\/strong><\/span>
\u201cYou must gain control over your money or the lack of it will forever control you.\u201d \u2015 Dave Ramsey<\/i><\/span><\/p>\n

Cash flow management is a daily exercise in a small business, and the goal is always to achieve positive cash flow. That is to say, there is more cash coming in than going out. If you\u2019re reading this article, you\u2019re probably not there.<\/span><\/p>\n

And that\u2019s a problem because if you want to grow a sustainable and healthy business, you need positive cash flow (extra cash) to do that \u2014 for inventory purchasing, equipment, and technology upgrades, additional staffing, marketing and advertising, and on and on. You know exactly what I\u2019m talking about because your own list of needs is perpetually hanging over your head.<\/span><\/p>\n

Where to start?<\/span><\/p>\n

Cash Flow Statement & Forecasting<\/strong><\/span>
If you don\u2019t have one of these in your repertoire of data reports, this is a great place to start. <\/span>This report summarizes the cash coming in and the cash going out during a given period. <\/span>In its simplest form, a cash flow statement represents this basic equation:<\/span><\/p>\n

Cash on hand minus expenses equals cash flow<\/i><\/span><\/p>\n

However, a cash flow statement is limited in that it doesn\u2019t take into account future transactions. For businesses that are dependent on seasonal dynamics, as one example among many, cash flow forecasting is essential.<\/span><\/p>\n

Cash flow forecasting is what its name implies: a tool to estimate future income so you can fulfill obligations, anticipate expenses, and establish a realistic plan for growth.<\/span><\/p>\n

Without the data that these reporting tools provide, the tendency is to make uninformed decisions about how much to increase prices and which expenses can be cut (marketing is typically the first to get prematurely slashed). <\/span><\/p>\n

Cash Flow Scenarios<\/strong><\/span>
One of the ways an accountant can help you achieve positive cash flow is by building out various future scenarios and establishing how to respond. Let\u2019s look at a few examples.<\/span><\/p>\n

Scenario 1: Late-paying customers<\/u><\/span>
You’re facing a cash flow crunch because some of your clients consistently pay their invoices late, causing you to struggle with bills and payroll.<\/span><\/p>\n

Possible lever to pull: Implement clear payment terms and follow up<\/i><\/span><\/p>\n

Start by more clearly outlining payment terms on invoices, specifying due dates and late payment penalties. Follow up promptly when invoices are overdue. (Automated invoice reminders can help streamline this process.) You could also consider offering discounts for early payments to incentivize prompt settlements.<\/span><\/p>\n

Scenario 2: Seasonal revenue fluctuations<\/u><\/span>
An ice cream shop in a beach town, a snow plowing service, a farming operation, a mowing and landscape management company, or any business experiencing a significant drop in revenue during their off seasons.<\/span><\/p>\n

Possible lever to pull: Diversify offerings and build reserves<\/i><\/span><\/p>\n

During the off season, introduce new services or products. It’s also crucial to set aside profits during the peak season to cover expenses during slow periods.<\/span><\/p>\n

Scenario 3: Excessive inventory<\/u><\/span>
Your excessive inventory is tying up capital, leading to cash flow constraints.<\/span><\/p>\n

Possible lever to pull: Optimize inventory management<\/i><\/span><\/p>\n

Closely monitor inventory turnover rate and adjust purchasing accordingly. Consider running clearance sales for slow-moving items or bundle products to encourage sales. Implementing inventory management software can also help in maintaining the right stock levels.<\/span><\/p>\n

Scenario 4: Unforeseen expenses<\/u><\/span>
Unexpected costs strain cash flow.<\/span><\/p>\n

Possible lever to pull: Emergency fund and financing options<\/i><\/span><\/p>\n

Having an emergency fund in place can be a lifesaver in such situations. Set aside a portion of profits for unforeseen expenses and explore financing options like a business line of credit to cover immediate costs while preserving cash flow.<\/span><\/p>\n

 <\/p>\n

The freedom that positive cash flow can provide allows you to tackle other issues of financial business health: increasing savings, reducing debt, or expanding into new markets. Let\u2019s work through your scenarios and start creating solutions:
https:\/\/calendly.com\/d\/46r-49m-93k\/10-minute-intro-call<\/a><\/strong><\/p>\n

 <\/p>\n

We\u2019re with you,<\/p>\n

Mark Perlberg<\/strong><\/p>\n

 <\/p>\n<\/p>\n<\/div>\n