Under Pressure: How to Manage Cash Flow Strategically

*This post is from CMB partner Essex Lease. Visit them for flexible lending solutions.

The business world is competitive, so having a strategy is critical. Business owners must have flexibility in order to stay focused on their goals and long-term growth plans.

But if you’ve ever been locked in a precarious cash flow cycle, you’ve likely experienced how limiting “cash pressure” can be to your business goals.

When you’re forced to divert working capital away from strategic priorities, your business suffers. You’re not focused on sales or growth – you’re simply trying to make it to month’s end. For example, a time-sensitive opportunity is lost because you don’t have the working capital you need to act quickly. Investing in equipment becomes nearly impossible. Most of your energy is spent managing costs, not executing strategy.

So, how can business owners avoid the common pitfall of cash flow pressure? Let’s explore why so many business owners experience this challenge and what can be done to address it.

Common Reasons Businesses Find Themselves Facing “Cash Pressure”

There are several reasons businesses find themselves in a difficult cash position, including:

• Not planning for the unexpected – Economic uncertainty, seasonality, and rapid growth can all contribute to cash flow strain if businesses don’t have the flexibility to manage the unexpected.

• The wrong financing plan – Boilerplate financing plans that don’t take business cycles into account can quickly drain cash with payment terms that don’t match revenues.

• Restrictive lending partnerships– Lenders that are slow to respond to changing business needs or are too risk-averse can’t help businesses respond to challenges.

• No personalized service– Failure on the lender’s part to take the time to understand the business and offer tailored advice.

Strategies for Taking Control of Your Cash Flow

Taking control of your cash flow will offer your business a significant strategic advantage when it comes to pursuing your business goals.

Here are some ways business owners can get a handle on their cash flow pressure:

• No more boilerplate financing – One-size-fits-all financing wasn’t made with your business in mind. Get a custom plan that leaves you with the cash on hand to stay competitive.

• Think outside the box– Consider different models for accessing working capital, such as an Asset Based Line of Credit, Pre-Approved Equipment Line of Credit, Capital Expenditure Financing or other applicable solutions like refinancing or restructuring payments.

• Get control of debt costs– Stretching out debt maturities to lower your monthly payments can give your business a cash buffer.

• Diversify your lending relationships – Explore your lending options and ensure you work with a lender who’s an expert in your industry and can back your success with fast access to working capital.

Ultimately, business growth comes down to your ability to pursue your goals. Eliminating the stress of cash flow pressure is essential to staying focused.

Ready to take control of your cash flow? For over 35 years, Essex Lease Financial has given Canadian businesses a strategic advantage – access to the fast, flexible working capital they need for growth.

If you’re ready to work with a lender that works for you, contact us today to learn more or get started.