Cash Flow Strategy

As the lifeblood of any organization, managing the flow of cash can be considered more important even than the profitability of the business. Without cash, employees cannot be paid, inventory cannot be procured, and client services and products cannot be delivered. Managing the timing and velocity of cash inflows and outflows is the difference between being in business or being out of business.

Shortening the cash to cash cycle (period of time from initial purchase of inventory item, product, or service by the business through production or client fulfillment and then actual collection of payment from customer or client) decreases the amount of working capital funding required by the business. This cycle can often take as long as six months or more. Consider a production process that is 45 days from receipt of inventory, add production labor, and 60 days to collect from the client after invoicing. The vendor will only give 30 day terms and we are looking at a cash to cash cycle of 75 to 90 days. All of the expenditures that occur within that 75 to 90 day period must be covered by working capital on hand or working capital financing.

In addition to providing working capital financing, there are many products and services available to assist the business owner in getting access to funds quicker and reducing the amount of funds that must be borrowed.

CRS Financial Management Solutions can prepare for you cash flow projections that are designed to allow you to know in advance when funds fall short of needs and when excess cash is available. Don’t get caught sweating out collecting enough for the next payroll. CRS will help you to prepare in advance.