When the money isn’t coming in, there can be a variety of problems for a business. It’s tough to make payroll without a steady flow of income. Creditors’ and suppliers’ bills aren’t paid so easily. And should there be any unforeseen difficulties or capital costs, they can be tough to meet.
It’s always important to have a good relationship with your banker in such situations, because lines of credit and other financing opportunities are important. But borrowing is not the only way to make sure stalled cash flow doesn’t have a significant impact on your business. Addressing other areas can keep costs low and avert crises when the receivables aren’t streaming into the office, because it isn’t always the customers’ fault.
Here are five ways to lower costs and mitigate the impact of slow cash flow—and keep the bottom line robust at all times of the year.
Take a look at your mortgage or rental agreement and see if it’s possible to lower the rate. Maybe you can refinance and lop hundreds—if not thousands—off the monthly payment. Or contact your landlord and try to negotiate a more pleasing payment. If that isn’t possible, take a look at your space. At a time when more and more employees are telecommuting or serving in consulting capacities, you might not need so much room. A smaller office footprint means smaller monthly rental payments and some insurance when cash flow stagnates.
Nobody wants to work in an uncomfortable professional environment, but there is no reason an office has to be tropical in the winter months and like a walk-in freezer during the summer. A few simple steps can cut energy costs and help defend against troubles when your business isn’t flush in the short term.
During the summer months, make sure to draw the shades, the better to keep the hot sun from turning your office into a greenhouse. Keep the air conditioning at a comfortable level, but it’s not necessary to make things ice cold. Why not institute a more casual dress code in the summer to let employees wear lighter clothing when not seeing clients? When the temperatures drop, there is no need to keep the heat high. It’s not at all unreasonable to ask employees to wear sweaters. Don’t freeze people out, but be judicious when turning up the heat. And get a professional in to check the HVAC equipment. Installing energy-efficient windows could help your climate control year-round.
Travel and leisure
Client service and entertainment are two big parts of business. Keeping your customers happy keeps them returning to give you more work. So, it’s important to spend time with them, whether that is done through travel to their offices or by treating them to meals, sporting events, concerts and other events. Travel costs can be managed a bit through teleconferencing and other technology. And being judicious with entertainment options can lead to savings.
The shipping news
Some things absolutely have to be at their destinations the next day. That makes sense. But not everything is so time sensitive. Establish strict shipping protocols and make your employees stick to them. Getting something there in two or three days is usually entirely appropriate. Make full use of scanning and email technology for documents and compare the costs of many different companies to make sure you are getting the best deal when you must ship something.
If you like these ideas, you’re going to love the other ways we can help you manage costs, avoid cash flow headaches and save money. Let us take a comprehensive look at your company’s expenses to see how we can make your business run smoothly and profitably.
For over four decades, the team at Whisman Giordano & Associates LLC has focused on building extraordinary relationships by working diligently and spending time getting to know our clients. Our focus is on providing peerless accounting, auditing, tax planning, compliance and business advisory services. We’d love to learn more about your tax situation and give you insight into what to do next.
Whisman Giordano & Associates LLC
Certified Public Accountants
111 Continental Drive, Suite 210
Newark, DE 19713
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