Cash-flow management is always important, but when you're in the middle of a launch it's vital. You don't want a lack of funds to get in the way of a successful delivery—or worse, put your entire business at risk. Keep things moving in the right direction with these cash-flow management tips.
1. Conduct a cash-flow audit.
Cash-flow management is the process of tracking how much cash you have coming in and out of your business. The goal, of course, is to make sure you always have more cash on hand than you owe, so you can have funds available to cover the costs of your operations and some on reserve. Having solid processes in place can help make managing your cash flow easier.
Before you kick off a new project, make sure your cash-flow management processes are tight by conducting a cash-flow audit. Starting with your contract process, review any stage within your business where cash is going in or out. Wherever you can make adjustments to keep more of your cash, note it.
Look at your outstanding debt and familiarize yourself with how much cash you have available. Then, align these numbers with your launch plans, and review them with a member of your project or finance team and do some forecasting.
Based on what you know, figure out how much cash you'll have (and need) on hand in six months, a year, three years and so on. From there, think through where you are today, how that may change throughout the launch and if/when adjustments will be needed.
2. Update your cash-flow management process.
Once you have an idea of your current process, look for ways to keep more cash on hand by streamlining the process.
For example, what are your current terms for customers and vendors? Are there ways to shorten the grace period on either side? If you previously offered 90-day payment terms to your clients, consider offering 30- or 60-day terms or offering discounts for payments that are made in full. The goal is to have longer payment terms with your vendors and a decreased grace period with your customers.
From there, consider evaluating your accounts receivables process and make sure you have steps in place to collect outstanding debt. A streamlined cash-flow management process can help reduce cash-flow challenges downstream.
3. Automate the billing process.
It's not uncommon for customers to pay their bills late or sometimes not at all, which can affect your cash on hand.
To help, consider automating as much of your billing (and collections) process as possible. The majority of invoicing systems on the market today have recurring billing features and the option to turn on automated email reminders. Consider utilizing the available automated features in your billing system.
When you can automate the process, you reduce the risk and burden of customer delays.
4. Stay nimble. Hire freelancers and contractors.
Outside of the process, there are a series of other steps you can take to help manage your cash flow.
Payroll can be one of the largest line items for most businesses. If the launch requires the support of additional resources, consider hiring freelancers or consultants instead of permanent employees. Doing so may give you the opportunity to get the support you need and a specialized skill set without the long-term costs associated with hiring a full-time employee.
5. Hire a cash-flow management expert.
If this launch means more responsibility for you, consider bringing in someone to help you keep an eye on costs. This individual could be a project manager (someone who is responsible for overseeing the costs and delivery of a project), a program manager (someone who is responsible for overseeing multiple projects) or your accountant.
If you're comfortable managing the rest of the business and just need assistance keeping an eye on cash-flow management for the launch, a project or program manager may be sufficient.
If you feel like you could use assistance with cash-flow management across the business, consider looping in your accountant or a contract chief financial officer.
6. Create a prioritized list.
Even the most successful launches run into problems. Knowing in advance what deliverables “must launch," “can launch later" or “can wait" can help make decision making easier if you run into cash-flow management challenges.
If you're tracking the deliverables, consider assigning each task or purchase a weight. If items are essential to your launch, flag them as high priority; then, consider directing all funds to those items.
You can assign a medium or low priority to the items that can be funded after the launch. Once you see your cash flow increase, you can reallocate funds to these items based on need.
Doing a little prep work, automating old processes and delegating where necessary can do a lot to help keep cash-flow management concerns at bay. And when you're in launch mode, it's important to have the time and space to focus on what's most important—getting to the finish line.
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