Conquering Cash Flow Concerns

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Page 26
How to Conquer Cash Flow Concerns

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When you are running a business, cash remains king. Your business needs an adequate amount of cash coming in to keep running. Without it, you are unable to pay bills or move on to the next phase. The more cash your company has, the better able it is to invest in itself and continue growing.

If cash flow problems plague your company, you are not stuck. There are several ways you can improve your cash flow issues. New Direction Capital can offer guidance and suggestions that help you business solve any issues and get on the path towards growth.

Forecast Accurately

While no business owner has a crystal ball that can accurately predict the future, a forecast can act as a guide when it comes to figuring out what the cash flow for the company will be and for making appropriate adjustments based on reality. A cash flow forecast looks at both the amount of money you expect to see come into your company and the amount you expect to go out.

If your company is established, you can use historical figures to create a forecast. New businesses can look at industry trends to help them put one together.

Without a forecast, it is difficult to see where your company is struggling  or to detect the source of any cash problems. If you are unsure how to go about creating a forecast, a virtual CFO can provide customized assistance, based on your company’s needs.

Look at Receivables

If your business anticipates receiving a certain amount of cash each month, but isn’t, one of the first places you may want to look for a discrepancy is in your accounts receivable. While in an ideal world, customers will pay on time, in reality, that isn’t always the case. An accounts receivable analysis can help you see which customers have paid, which are 30 days past due and which are more than 60 or even 90 days past due.

Your company may find that it has a number of bad debts, or customers who are very late in paying. There are several ways to reduce the chance of having bad debts in the future, including running a credit check on customers before agreeing to offer a product or service without upfront payment.

You may also decide to only work with customers who can pay with cash upfront or who pay with a credit card. Another way to encourage on-time or early payments, and to improve your cash flow, is to offer an incentive or discount to customers who pay early.

Increase Profitability

If your cash flow problems aren’t related to your customers, they may be connected to your company’s lack of profit. Even if your business has a steady stream of customers who pay in a timely fashion, a number of other financial considerations might be impacting the amount of money the business holds on to.

In many cases, businesses struggle with low profits because they don’t understand the financial big picture. It takes more than simply having a core customer base and doing good sales to be profitable. If you have money coming in, but it doesn’t stick around, New Direction Capital can help you figure out if a lack of profit is part of the problem and offer ways to help your company become more profitable.

Consider a Line of Credit

Your company’s cash might be locked up in a number of places, including accounts receivable and inventory. One option for freeing up some cash is to take out a line of credit or other type of financing. A line of credit can provide a bridge during those times when you need cash to pay your business’ bills, but are still waiting for clients to pay or have money locked up in unsold inventory.

At New Direction Capital, we have more than 20 years of experience helping companies conquer their cash flow problems. If your company struggles to pay bills each month or can’t figure out what the source of its money woes are, contact us today to learn more about how we can help.

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Image courtesy of Master isolated images /

Image courtesy of Master isolated images /

Once a business becomes established, the next step tends to be taking it to the next level or growing the company in some way. Just as teenagers experience growing pains when they grow too quickly, it’s possible for your company to experience some problems if you try to expand too rapidly. Before you decide to go to the next level, check in with your business to see if you are really ready to grow.

How Are Your Products or Services Doing?

One thing to consider when deciding whether or not it is time to grow your company is how the products or services you offer are performing. If you run a medical practice, do you have more patients calling for appointments than you have time to schedule? If you sell products, do you have customers asking for variations on what you offer, such as a skirts when you primarily sell pants? Has your company recently landed a huge client, meaning that you’ll need more help and support to manage the account?

Do You Know What You Can Handle?

Figuring out your company’s current limits will let you know if you need to grow. For example, if you have more patients than time on your calendar, you may consider hiring an associate to take some of your patient load. Understanding your company’s current strengths and weaknesses will allow you to plan for growth in a way that addresses those weaknesses and builds on those strengths.

Is There Money in the Bank?

Before your business can grow, you need to have a firm grasp of its financial health. If you received financing to start your business, have you been able to repay it? Does your company have enough cash on hand to meet the increased demand that can occur when you expand the business? Do the business have enough capital to cover the expansion? For example, if you are hiring a new employee, is there enough in the budget to cover that person’s salary and benefits? Do you have a backup plan that will cover your business’ financials in case anything goes wrong with the expansion?

If you aren’t working with one already, a virtual CFO can provide you with the individualized guidance and tools you need to oversee your company’s financial health through an expansion.

Do You Have a Plan in Place?

As important as having the capital and financing to fund your growth is having a plan in place to guide you through the process. Your business plan should outline the best ways to grow your business and the best route to take. The plan should include ways to get funding or financing to cover the cost of growing the company, as well as the steps your company will take to expand for the lowest cost and with the best results.

Your company’s growth plan should paint a clear image of the optimal ways to use the resources it has currently. As your business grows, it’s important to revisit the plan and make sure the company is staying on track. If your company has moved off course, the plan should help you figure out how to get back on track.

Do You Have a Strong Support Team?

One final question to ask yourself before deciding to grow your company is: do you have enough support? Support can come in many forms, from a team of employees are ready to move to the next level with the company, to outside vendors and service providers, such as a virtual CFO, who can guide your business through the expansion. You also want to confirm that you have the support of your customers as you start to grow your business. In many cases, customers will be the ones pushing for growth, especially if they like what the business has to offer.

It is very easy to get lost in the excitement of taking the next step with your company. For level headed guidance and support as you move to the next level, contact New Direction Capital today.

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Image courtesy of tungphoto /

Image courtesy of tungphoto /

No matter how long your company has been operating, it needs a strategic business plan. A strategic plan is a roadmap for your company. It lets you see not only where you want the business to go, but also the best way to get there.

Despite that, many small and mid-sized businesses go without a plan every year. If your company doesn’t currently have a plan, a virtual CFO can help you not only create one, but also put it into practice.

What is a Strategic Business Plan

A strategic business plan is somewhat different from a standard business plan. The major difference between the two is when they are needed. Most companies create a business plan when they are just starting up. A business plan describes the company and its product or service. The plan is often used to seek funding for a new company and to let investors or lenders know how viable the idea is.

Strategic business plans are commonly used by more established companies. The goal of the plan is lay out the company’s strategy, where it wants to go in the future and how it plans to get there. It describes ways to arrange the business’ priorities to make the best use of revenue. The plan should allow a business to build on its strengths and find ways to improve or eliminate weak areas.

One area a strategic business plan commonly focuses is on is its priorities. The goal of many plans is to help a company figure out what is most important and what areas to focus on to increase growth.

Why Your Company Needs It

Having a strategic business plan, or not, can be what makes or breaks your business. A well thought out plan can let you see if it is time to take your company to the next level or if you need to wait a bit before growing or expanding. The plan can also let you see if your company needs to take a step back in terms of size or product offering.

Using the plan to set priorities means that you aren’t focusing on areas that won’t help your business. For example, developing a plan can allow you to funnel your business’ resources to where they will provide the most benefit, whether that is hiring a new employee or removing a product that isn’t performing well.

A strategic business plan also allows everyone in management understand what the company is doing and where it is headed. The plan can also be useful to non-management employees. When they see the plan, they can develop a sense of the direction your company is headed and the overall health of the business.

With a strategic plan in place, you can begin to correct any issues that have plagued your company. A plan can help you see where your company is spending more than it needs to and to find ways to trim extra expenses.

Working with a Virtual CFO

Sometimes, it can be difficult to see the forest for the trees, especially when it comes to creating an overall strategic plan for your business. You may be so involved in managing the day to day operations of your company that it’s hard to take a step back and plan for the future. A virtual CFO can be a valuable resource when you are developing or re-working your company’s plan. He can provide useful third party insight and help your company develop an effective strategy and plan for the next step, no matter what it is.

The team at New Direction Capital has more than 20 years of experience partnering with businesses, helping them plan and solve problems. To learn more about how we can help your company develop a strong strategic plan, contact us today.

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Image courtesy of Ambro /

Image courtesy of Ambro /

When it comes to the financial health of your business, who you’re banking with matters just as much as the size of financing you get and the amount of revenue your company earns. A bank that is a good fit for your company can save your business money in the long run and can save you time, as the bank will have an understanding of your business’ strategic plan and how it operates. A virtual CFO can help you find a bank and develop a strong business relationship with it.

Take the Time to Shop Around

Not every bank will be the right fit for your company. The bank you’re currently using for your accounts or loans may not be ideal, for several reasons. A bank that’s not doing well financially won’t have the funds or ability to give your business the financing it needs, for example.

Size matters when it comes to finding a bank, too. Ideally, the bank you end up working with will have experience dealing with small or mid-size companies. It’s easy to become lost in the shuffle if your company is a mid-size business working with a bank that is used to working with larger clients.

Keep Your Financial Details in Good Order

Your relationship with your bank can only be as strong as your financial details. If you don’t know what is going on with your company’s finances, it will be difficult for your bank to know and to provide you with the services you need. The team at New Direction Capital can help you create a strategic business plan and keep track of the day to day financial details, so that you can provide the bank with the information it needs to best meet your needs. A virtual CFO can prepare your company’s financial statements and explain them to you and the bank, so that everyone is on the same page.

Keep in Touch with the Bank

Communication is key to building and maintaining a solid banking relationship. That means keeping the bank up-to-date on any changes in your company, including any new hires, changes to the products or services you offer, and changes to the vendors your business uses. As your company’s needs change, how you use the bank will change, too, which is why it needs to be kept updated.

If your company is struggling, the bank should know that as well, within reason. When you have to give bad news to the bank, do so in a way that shows you are working on the problem, so that your overall relationship doesn’t suffer. The sooner you let the bank know of any issues, the sooner you can work together to come up with a solution.

You also want to keep up-to-date on what is going on with the bank. Banks can fall on hard times, too. Even if you’ve had a years or decades long relationship with one financial institution, if it should start struggling or be unable to provide the financing or support you need, it may be time to move on and find another bank to work with.

New Direction Capital has helped numerous small and mid-sized businesses establish and maintain strong, working relationships with banks. Reach out to us today to learn more about how we can help you find a bank that best meets your needs.

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Successfully running a business means more than having a terrific idea and a strong customer base. It also means having a full understanding of your company’s financial health and what your business needs to do to achieve its goals financially. At many larger businesses, a chief financial officer (CFO) is the executive in charge of overseeing a company’s financial details, taking care of both income and expenses.

While small or mid-sized companies also need the services of a CFO, they often don’t have money in the budget to hire another senior manager, which is where a virtual CFO can step in. The services provided by a virtual CFO and a company such as New Direction Capital are designed to help your business grow.

Experience You Need at a Price You can Afford

The problem many small or mid-size businesses face is that the cost of hiring a full-time CFO exceeds their budget. Hiring a full-time employee means not only having enough to cover his or her wages, but also putting together a benefits package. The more experienced and talented the CFO, the higher the cost. One solution is to hire an entry-level accountant or financial officer, but that person will often not have the experience needed to know how to go after the right type of funding or how to implement a plan that allows a company to grow.

When your business decides to outsource the responsibilities of a CFO, you can get the experience you need for the most growth without paying for a full-time employee. You can work with a virtual CFO on an as-needed basis, such as during a project or work with the CFO on a regular, part-time basis.

Grows with Your Business

The role of a virtual CFO can grow and change as your business needs grow and change. Instead of needing to hire an additional employee, you can simply shift the role and responsibility of the virtual CFO to meet your needs at the moment. For example, you may initially work with New Direction Capital to help your company save money. A few years down the road, your business might need to find a new source of capital or financing, at which time the focus and role of the virtual CFO can also change.

Services Shaped to Meet Your Needs

Since every business is different, the exact role of a virtual CFO will also be different. Although not an employee, your virtual CFO becomes an important member of your team, working with you directly to come up with customized solutions for your company. The focus of a virtual CFO is on building a relationship with you and your business. Having a clear idea of what your company wants and needs allows the CFO to tailor a solution that works for you.

24/7 Availability

There is no 9 to 5 in the virtual CFO world. New Direction Capital is committed to providing around the clock service to clients, which means that if you discover a financial problem at 10 pm on a Friday or in the early morning on a Tuesday, you can reach out to your CFO for help and guidance.

Help You Reach Your Goals

Where do your see your business in five or 10 years? If you are unsure, a virtual CFO can help you create goals and then put a plan into place that helps you realize those goals. For example, a CFO can help you decide if it’s the time to expand your company by opening another location or if it’s the time to make the move from leasing property to owning it.

If you are ready to take your business to new heights or need assistance getting your financial details in order, New Direction Capital can help. Contact us today to learn more about how our services can best serve your company.


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