A Blueprint for Positive Cash Flow
Put the right systems in place to manage your cash flow

As every small business owner knows, maintaining cash flow is critical to growing a business. It makes it possible to hire new employees, purchase new equipment and take advantage of new business opportunities. However, according to the 2015 American Express OPEN Small Business Growth Pulse, 36 percent of small business owners credit cash flow issues with keeping them up at night. It isn’t easy for construction companies to get loans and between expanding quickly and needing to source business materials, it's understandable how cash flow can make—or break—your business. Without the right systems in place to manage your cash flow, you could find your business overwhelmed by that next big order and potentially unable to grow your business. There are fairly simple steps you can follow to form a "blueprint" for one. While the core principles may seem obvious, they can be challenging to keep up with—but the diligence in setting up a good system will be more than worth it. Consider the following:

Make Cash a Priority

While it may sometimes feel this way, cash flow issues do not occur out of nowhere. They can usually be found fairly quickly by keeping a close eye on your financial statements (balance sheet, income statement, etc.), as well as by building an annual cash flow projection. Your business probably already aggregates this information into a statement of cash flows that allows you to see the cash generated and used in your business during a specified time period. If not, reviewing these statements show the movement of your money over a period of time and is the easiest way to get a sense of where your cash flow stands. By knowing when your company’s finance is likely to experience dips and rises, you can plan when you need to seek credit. Think of lines of credit as temporary fixes to help your business overcome a rough patch.

Know Your Payment Options

If you are looking for ways to extend your cash flow, consider branching out from checks and ACH payments. I put the majority of my business expenses on my American Express card and started my business with an Amex line of credit. Searching for cash flow options outside of traditional sources can help your business remain nimble and ready for growth. When using a credit or charge card, you are able to pay a vendor or supplier on their timeframe, but can delay payment on your end if needed. Cards also offer a variety of benefits including fraud protection, security and extended warranty on purchases. Many even include reward programs that you can re-invest back into growing your business.

Reduce Monthly Expenses



Even the smallest reductions can add up over time. An easy way to look at and reduce your company’s expenses is to target and analyze recurring costs. For example, find alternative ways to handle peaks without having to buy additional equipment, look to current talent to see if you can develop your internal team or rent the needed equipment to take on that big contract. Also, consider analyzing employee expenses to see if there is a way to reduce costs that may be hindering growth.

Tailor the Collection Process

It is easy to send out payment terms and forget about them. The first step to avoiding this is to understand your customers’ billing preferences and procedures. This will help you to invoice them in a manner that they prefer—sending the required funds into your account much quicker.

Plan for the Worst (or Best) Case Scenario

Even the best cash flow managers will find themselves in tight situations from time to time. It is important to plan for these situations so opportunities are not missed. Key areas you should be consistently aware of are the funds in your cash reserve, your spending limit on your credit card and available lines of credit. Remember, hope is not a business plan. Whatever steps you decide to incorporate into your cash flow blueprint, remember that creating a system for healthy cash flow will help you consistently manage your business needs. If a business is able to maintain their cash flow they will be better able to purchase new equipment and take advantage of new business opportunities when the time comes. By turning good practices into habits your business will be better positioned to profit and grow.