A recent survey by SunTrust bank of Atlanta asked over 200 small and mid size business owners what steps they had taken to improve their cash flow situation in the last twelve months.  Cash flow has become a critical issue for our clients, and much of the groundwork that has already been laid: cash flow forecasting and planning, husbanding of working capital, and  close relationships with bankers has helped them through recent months.  What are the key  steps taken by most companies?

• Budget expenses more closely.  Nearly 70% of owners reported that the budget has become a means to manage expenses with tighter and more frequent reporting.
  
  
• Managed Cash flow and working capital more closely.  63% of owners have adopted cash flow forecasting with daily and weekly updates.  Working capital management and the turnover of receivables and inventory are key, as is the management of vendor credit.
  
  
• Controlled employee spending with authorizations, approvals and limits.  Less than 40% of owners have tightened the reins on employee expenditures.   If it's not their money then they will never be as careful as you will - so those controls are vital.
  
  
• Changed Customer and Supplier payment terms.  Less than 30% have varied payment terms.  Tightening up on customers regular terms and on collections is more important than ever.  Offering discounts or accepting credit cards for prompt payment are worth investigation.  Maximizing the use of vendor credit, and negotiating extensions can also help.
  
  
• Other solutions include offering more electronic payments choices - get cash in the door faster before collections becomes a problem; reducing inventory levels - both as  function of declining sales and as a result of increased efficiency in inventory management;  increasing access to credit  such as a larger line of credit, or terming out longer term liabilities, or making use of equipment and receivables financing are all solutions.

For  a free company analysis, contact David Kirkup, Partner at B2B CFO on 404 348 0326 or at dkirkup@b2bcfo.com