Solve Your Business Cash Flow Woes

Even though you work hard to keep operating expenses under control and focus on efforts to rev up sales, cash flow can still be problematic. That’s because expenses, sales and cash flow aren’t directly tied to one another. In fact, each operates on its own schedule.

• Operating expenses crop up like clockwork. Every month, no matter whether sales are good or cash collections are on target, payroll must be met and payments for your workspace, utilities, taxes, insurance and other expenses must be made. There isn’t much you can do to influence the timing of these expenses — you need cash on hand when they’re due.
• Sales are more closely related to cash flow, but there’s often a lag time. You may have a signed contract or a purchase order at the completion of a sale, but that doesn’t mean cash has been received. For many transactions, the actual receipt of cash comes later, sometimes months later.
• Cash flow is influenced by its own set of circumstances independent of the cycles of sales and expenses. An influx of cash should follow every sale. But many situations can interfere with that ideal, such as customer cancellations, back orders, order-filling mistakes, freight damage and delayed customer payments.
  
   

Fortunately, there are many ways to solve cash flow problems, and Amegy Bank has the tools you need to accomplish that goal. You may need to employ a combination of strategies for the best results.

• Automated Clearing House (ACH) collections eliminate mail delay completely and help reduce the incidence of checks returned due to insufficient funds. ACH simplifies the receivables process by allowing you to automate one-time and recurring receivables to help you improve funds availability.
• e-Invoicing allows you to collect payments and information from customers directly on your website or email invoices with the convenience of click-to-pay. It also allows your customers to set up recurring automatic payments to accelerate cash flow.
• A business line of credit can help you manage seasonal or other temporary cash flow troubles. When you need an interim financing solution, a business line of credit[cite::2149::cite] can fill the gap with funding for short-term working capital needs.
• Non-traditional banking options may be used for larger companies that need more aggressive sources for working capital. With asset-based lending, you can borrow against accounts receivables, inventory or fixed assets for special situations. Factoring is another non-traditional option of working capital financing provided through the discounted purchase of qualified accounts receivables such as eligible invoices from a completed service, or accepted product, that essentially transfers the credit risk from you to your customer. This also should only be used in special situations.
   

Your business banker at Amegy Bank can work with you to identify the source of any cash flow woes and find creative solutions with receivables management. Learn more about business survival tips in a changing economy.