Not enough headroom in your bank credit line? Trying to increase Your Score by reducing Net Debt? Here are areas your own cash flow can likely be improved and where Double Eagle Advisors can assist:
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Customers
Get them to pay a little quicker. Offer a discount for faster payment and remind them your price is predicated on standard terms. Sure – this is easier said than done. But don’t assume nothing can be done.
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Vendors & Suppliers
Slow down payments to your suppliers a little more. Do they call you for payment – or do you remit without their call? If they aren’t calling you – you are paying too fast.
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Collection efforts
Are you working on the largest delinquent balances first? Or not sure of how to allocate your time and efforts? Start with the largest opportunities for success – but not necessarily your largest balances.
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Lender advance rates
Does your current lender stop lending (classify as ineligible) receivables over 60/90 days? If so – focus on these older accounts that can have the most impact to your availability and liquidity. Collection of an ineligible account produces 100% increase in available cash. If however, you focus on a more current receivable – collection here will only provide incremental 20% cash assuming your lender was already providing 80% advance.
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Sale of idle assets
Often times these can be sold for cash to prop up cash flow. Action here may not benefit you today – but action today can become a cash bonus in the near future. Yes these are one-time inflows – but most business also incur one-time or unexpected bills/charges/penalties – right?
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Any deposits with landlords, suppliers, utilities, credit card processors?
Often these can be reduced or renegotiated to generate cash – particularly if the size of your business is now lower or even the same.
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Revenue Cycle process
Most overlooked area of opportunity. This is the entire process of customer contract/P.O….delivery of product/service…invoicing…collection. Can any portion of this cycle be improved? If so – you may be surprised at the amount of cash you can generate by streamlining each step in this cycle.
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Inventory
You need to walk a fine line here: enough inventory to maintain high order fulfillment for customers, but not too much. Enough critical raw materials to keep your factory lines on schedule but no excess. Try to look back up the production/sales cycle for help. Can a supplier hold more inventory for you on reserve before shipping?
You may have already considered each of these areas for improving you cash position. Each action – however small on its own – can create meaningful additional cash flow on an overall basis. Call Double Eagle Advisors to discuss how your efforts can be accelerated or refocused for better results.
