All businesses need to have a good cash flow if they are to survive and thrive. Lack of liquid money can create poor credit, slow bill payment, and even prevent successful production for new clients or customers. Indeed, it is imperative to find a balance between invested cash and that which keeps things running smoothly. Though loans and credit lines are certainly an option, consider that there may be places to find hidden cash in your business. Let’s take a look at just a few places that may be holding some extra money.
Find Hidden Cash in Your Business #1: Inventory
Many types of businesses are required to carry an inventory in order to serve customers efficiently. Furthermore, there are certain times of the year when they must stock up for a high demand. A Point of Sale system that tracks inventory is the best for keeping track of what has been sold and what remains. This enables any manager or owner to forecast inventory needs more effectively. You not only save money on inventory taxes, insurance, and related servicing costs but can liquidate unneeded stock.
Find Hidden Cash in Your Business #2: Equipment
If you run a business that largely relies on equipment, you will find that you probably do have a considerable amount of money invested there. In fact, when you consider that most businesses rely on computers and other technology to an extent, this is something worth exploring by all firms and organizations. There are companies available that can help you determine if you have equity in your equipment. These types of analysts put together strategic financial plans so you can alleviate any cash leaks or unnecessary equipment.
Find Hidden Cash in Your Business #3: Product Cost
Have you negotiated the best deals with your suppliers? It’s entirely possible that you haven’t. After all, when starting up, a lack of knowledge and an eagerness to get going can result in accepting a deal that doesn’t serve your business. Also, what worked, in the beginning, may not work presently. It may be time to push a little harder for better deals. This might include purchasing in bulk, better pricing, early payment discounts, and longer payment terms. Think about what is right for your business and be prepared when you talk to each account manager.
Find Hidden Cash in Your Business #4: Labor Cost
Last but not least, are you spending too much on payroll costs and employee expenses? This can eat up a significant portion of your cash. And, yes, if you need employees, you can’t go lay off everyone and expect to stay afloat. There are some ways you can slim costs down, however, including using non-payment incentives, combining positions, outsourcing some of your work, and switching to an online payroll system. If your business is in trouble, you may have to eliminate some positions temporarily until things improve.
Running a business successfully can be tricky, especially if cash flow is limited. I recommend that you get an outside opinion about your structure and operations before problems arise. It’s fairly easy to get into cash issues when starting up a new business or trying to revamp an old one. Yes, I’ve been there and done that. Of course, there are some businesses that won’t survive no matter what you do. That said, do what you can to look for extra savings and hidden cash. It may not give you a healthy bottom line but it will help.