Back May 10, 2016

Cash Flow and Business Growth

The growth of a business brings both excitement and concern. Excitement for all the new projects and possibilities lying ahead, concern for all the additional costs, the uncertain revenue; in short — the cash flow.

So how can you keep the cash flow balanced when growing?

Forecast and Plan. Think of cash flow as the fuel to your growth. Developing the business means additional costs, but also additional revenue. Maybe not from the start, but this is where your management intel will get very handy. Your growth plan surely has anticipated a certain volume of sales and amount of costs. Schedule them as accurate as you can, so you learn when you need your cash and when to get it.

A new start — get the best deal. Business growth means getting to the next level; a new level, which also means a new start. Acquisitions will be made, people will get hired, and new utility contracts will be signed. Have your estimated revenue stream in mind when negotiating paying terms for your future bills. No need to underline how important it is to synchronise payments with available cash. In some situations you can use your ”loyal client” card to obtain further payment due dates or even discounts; it may seem of poor value, but even a day in your favour can make a considerable difference for the future of the company.

Increase sales. Yes, growing the business implies, naturally, an increase of sales. But the initial revenue may prove insufficient to cover the costs of the company development. What’s to be done? Instead of spending even more resources (time and money) to convert prospects into clients, you may focus on increasing sales volume with the existing clients. They are there already, they know you, so less effort is required to get them buy your new or improved products and services. In return, you get the precious cash faster to pay the incoming bills and support your activity.

Share the pressure with your clients. When your business is growing, because of the additional costs, you need more than ever to watch your cash flow. Even if this means to share the pressure with your clients. If you offer buy-on-credit products and services, consider to re-scale payment terms. Have in mind that the sooner you get the money, the more chances you have for a successful growth. Also, consider encouraging cash payments with attractive options. State it clear that this will benefit your clients, by allowing you to develop and offer better products and services.

Easier said than done. But if you approach it step by step, nothing is impossible. You can get in control with a good plan and continuous monitoring. Information is power. You can try our cash flow management platform. See how much you improve your control over the revenue and payment streams, so you can continue focusing on the company growth.