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Cash management strategies for business owners

Business Ownership // Article

Top five tips for navigating market volatility and inflation.

Managing cash flow at a small business can be a challenge during the best of times, but recent market volatility and inflation have made this task even more critical.

The below strategies should serve business owners well during both economic storms and more favorable conditions.

Five tips

  • Optimize the timing of your revenue intake. You have bills and payroll that require timely, predictable outlays of cash, but your receivables may be irregular or late. In fact, according to a 2021 QuickBooks survey, mid-sized businesses are owed an average of $304,066 in late payments. To accelerate your revenue intake, you need a system that minimizes late payments and manual efforts to invoice and collect. Dedicated software with automations may be a worthwhile investment that also helps you see the big picture of your finances. You can also consider providing discounts or incentives for early payment.
  • Use a business credit card with cashback rewards. You should earn cash back on as many of your business purchases as possible. These rewards, which can often be taken as account credits, are in effect discounts on all purchases. A business credit card without rewards but that has a low or 0% APR may also be useful in avoiding interest payments on credit card debts you have.
  • Consider securities-based lending to address emergency needs or expansion opportunities. Whether you need cash to protect your business from unexpected expenses or wish to expand, securities-based lending may offer a flexible alternative to traditional financing, often providing better interest rates than a traditional business loan. Underwriting is streamlined and clients can usually have funds available in a matter of a few days. You can use the borrowing power of eligible personal or business brokerage accounts to obtain your securities-based loan. Just be sure to talk to your advisor before applying.
  • Hold and sweep cash. Holding cash or cash alternatives is part of a well-allocated, diversified financial plan. Consider cash-sweeping programs as well that sweep your brokerage cash into interest-bearing accounts for maximum income earning.
  • Review subscriptions and renegotiate contracts. Now is a great time to renegotiate existing contracts, seek out new suppliers and reevaluate the value of your subscriptions. Periodically reviewing these fixed costs and seeking to reduce them is an important habit for optimizing cash flow.

Next steps

  • Talk to your advisor to help you optimize your on-demand cash and cash-flow management.
  • Evaluate your overall financial picture to identify any frequent problem areas or opportunities to increase income and reduce expenses.
  • Consider reducing your product or service portfolio, prioritizing your fastest and bestselling offers.

Sources: raymondjames.com; wellsfargo.com; usbank.com; nationalbusinesscapital.com; quickbooks.intuit.com