Decrease Cash Out
Understanding your biggest uses of cash is the first step in aligning your spending with your true needs. The Business Cash Flow Tool can help to forecast the impact that your expenditures could have on your outflows. We’ll help you evaluate your expenditures in categories that are typically the largest and give you ideas for improving your performance.
Current Take: COVID-19
The COVID-19 crisis has underscored the importance of good cash management, as many businesses experienced a large decline or even the cessation of revenue. Businesses with little in the way of a cash cushion were faced with difficult choices, and business owners with a good understanding of their cash needs were able to assess their needs and apply for payment flexibility, deferrals and loan capital. Use this time to build your understanding of your cash needs and look for opportunities to improve your use of cash.
Evaluate vendor relationships
- Assess your needs as they may have changed since you originally formed those relationships.
- Get clarity on what you value from your vendors, then evaluate your current and prospective vendors and realign to better meet your needs.
Make the most of your labor
- Review how you are deploying your employees to make sure their tasks are aligned with your goals.
- Identify tasks you can delegate so you have time for strategic thinking on how to manage or grow your business.
Take a fresh look at real estate
- Consider what you need physical space for, and if you’re using what you have wisely.
- Assess opportunities to negotiate, even if your current situation meets your needs.
Control your spending on inventory
- Tie your spending on inventory to your sales forecast.
- Consider selling stale inventory at a discount to generate a short-term source of cash.
Get the most from your marketing spend
- Set specific, achievable, time-bound goals for your marketing dollars.
- Follow the best practice formula: cash spent on marketing should at least equal sales generated by those marketing dollars.
Now you know what are typically the largest uses of cash by your business. Start to think about your vendor relationships, and how to maximize efficiencies there.
For Informational/Educational Purposes Only: The author’s views may differ from other employees and departments of JPMorgan Chase & Co. Views and strategies described may not be appropriate for everyone, and are not intended as specific advice/recommendation for any individual. You should carefully consider your needs and objectives before making any decisions, and consult the appropriate professional(s). Outlooks and past performance are not guarantees of future results.