OPE daily

Positive cash flow is the strength and growth of every business.

Winter can be especially stressful for landscapers and OPE dealers as cash flows become more like drips. Specifically when the time between when you receive payment from customers lags behind the time you have to pay suppliers and employees. Delaying the outflow of cash while collecting payments owed to you as soon as possible is really what cash management is all about.

What it is

It is vital that you understand when and where your cash is coming from. Accurate forecasting and planning starts with your cash on hand and possible sources of cash infusion from customer payment histories, interest earnings, and bad debt collections. Next is to determine amounts and dates of cash outflow.

It is best to line item everything that costs you money. Pay particular attention to cash purchases and small “everyday” outlays of cash as they tend to go unrecorded. Everything from salaries, rent, supplies, and petty cash should be planned. Be thorough without assuming too much.

Control your payables

Your suppliers may be your best source of cash control. Understand their terms and consider utilizing any discounts they offer. Price isn’t always as important as terms when choosing suppliers. Communicate your situation with them. Be upfront about any problems as soon as you are made aware. Maintain their trust and support so that they can assist you.

Get your money ASAP

This is probably the most difficult aspect for business owners to master. If you were paid cash immediately upon rendering every service or product than your cash flow problems would be minimal if at all. This isn’t always the case, however, and speeding the process of customer payments is the key to cash health. Checking customers’ credit histories is increasingly important. Take a deposit or even full payment on special purchases when the orders are taken. Track your invoices and monitor your accounts receivable and act promptly when issues of slow payment arise. It is also important to control your inventory. Get rid of over- or outdated stock for whatever price you can as quickly as you can.

You’re not Nostradamus

You cannot predict the future 100% of the time. So the question is not if you will have a cash shortage, but rather, when will you have a cash shortage? The situation occurs with every entrepreneur in every industry and it is something that can be assuaged with a little bit of planning and having the proper systems in place.

Have money available even when you don’t need. Lines of credit and flooring limits are easier to attain when you aren’t financially strapped. Encourage customer payments. You can offer your customers discounts on early payments and communicate quickly when payments are not so prompt.

Hold on to your cash. Use vendor terms to their fullest extent. If there is no financial gain to early payments then make your payment on the final due date. Ask for extended credit terms or higher limits as soon as you see a problem. Again, communicate quickly when it’s your payments that are not so prompt.

Now is the time to take the steps that will ensure your financial strength and growth can weather the storm.