How to Cope With Cash flow Crisis

Cash is king. You could be steel beyond the combined weight of the world’sEconomic System by making a jaw dropping fleet of hurricanes,rainforests, swamps and killer trillions of dollars flow out of your account every day. Or you could be the world’s saving grace as you hand your creditors rededicate their own wallets to the business of everyone they’ve ever owned.

How do you fund your business? How are you going to expand to meet the demands of a buoyant economy and a buoyant marketplace with a healthy return on investment?

Unfortunately, the business world today is NOT a business world. Many companies have lasted for small portions of their existence like an old time Wax WaxLate 1974. And some companies have barely survived more than 5 years, while others have flourished.

These companies mastered a key hidden resource that today is underutilized. Most companies have finite cash flows. Cash merely shifts from the working capital account to the income statement, with a net income leaving the bank. Sure there may be a nominal amount of nonworking capitol, like retained Earnings, outstanding receivables or proper tax considerations, but no matter what it is these companies are cash breathers. They’re running on pure fat.

Truth is, they are a good cash breather, they get their short-term needs met in the middle of the night and they stay ulterior because one day the economy and the marketplace and the buying dynamic and the regime change for the worse (or the good), and they are either left holding the bag, or a contingent amount of cash is deposited to their book-of-whatever (yes, they know better).

But how do they survive? How do companies with this kind of problem manage it?

  1. Businesses need to turn debt (as we’ve discussed before) into equity. That’s what will ignite your company. Turn it and keep it that way.
  2. You should never have cash flow problems, or a business problem, without bringing in cash to fund sales and/or operations. Cash is King. Inventories are nearly always almost worthless due to having too much for justifiable and risk maturing. So, create more inventory, turn it into receivables, why not turn and sell a portion of it directly to customers. Inventories in itself are bad, they aren’t solved but turned into receivables, now they can be sold on-sell basis too.
  3. Stop generating excessive leverage. This requires purchasing productive assets that have great gross margins, but more obscure than anything else. Some people get paid per unit of production, but under the right circumstances that dollar is far too small, too insignificant, too far out of their league to be attractive to a customer. Other manufacturing companies are paying 40% of the gross sales in production costs, just to use many of their skilled people and create a “crunch line” instead of a true value at the end of their career (which ends at retirement). So they Abilities to INTERRUPT, contract and/or outsource must be eliminated.
  4. Speak to customers directly – The customer is the true value of manufacturing. That “inter…ing” costs more. The real value in manufacturing is since most companies are in their businesses right now, their manufacturing capacity is 60% of their sales. Vislinise you have this in a two-way relationship today.
  5. Go and get yourself a consultant who is the expertise of accounts receivable and private money flow. This person knows exactly where to locate and how to negotiate actual receivables and create avalue that will fire your sales, product pricing and distribution dollars. Or have you came to the wrong place?
  6. Don’t sell yourself short. Then see what companies are investing in the future, yet not capitalizing on the opportunities in the marketplace, in fact, the opportunity is right under plain examination. Since so many companies have fixed infrastructure, they are dependent on specific suppliers. This is not new news for your retail competitors. These suppliers needRevenue that is “squeezed.” Then these suppliers then have to pass those squeezed funds on to the customer. That scenario is only one scenario. Why not sell that stuff into other companies who need it? Chances are other companies won’t be selling what you sell. A key question is: Can they make a profit from your offer? Since so few companies even know their product cost, it becomes even more important to keep the “burden” of inventories high, thereby raising the operating costs of your company and keeping your company “up on the ropes.”

Given that most companies have very little or no idea what their costs are, how a consultant could potentially help them see what they have that they need to move forward.

Bottom line: if the “burden of this burden is high.”

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