Specialty Fabrics Review May 2020 - 54

FOCUS

BUSINESS

paper checks remain the standard method of
payment. However, paper checks are slow,
highly susceptible to fraud and bear "hidden
costs" such as additional work and back- office
processing. They are also inadequate for
recurring invoicing.
Something as simple as asking customers
to switch to electronic funds transfer (EFT) or
Automated Clearing House (ACH) payments,
and providing incentives to switch, are among
the steps that can ensure faster, more secure,
more reliable and cheaper payments.

ALTHOUGH
SEEMINGLY
COUNTERINTUITIVE,
MANY EXPERTS
ADVISE PUTTING
CASH FLOW
MANAGEMENT
BEFORE PROFITS.

IMPROVING CASH FLOW
Profit doesn't equate to cash flow because, as
mentioned, cash flow and profit are not the
same. There are many factors that make up
cash flow, such as inventory, taxes, expenses,
accounts payable and accounts receivable.
The proper management of cash
outflows requires tracking and managing
the operation's liabilities. Managing cash
outflows also means following one simple
but basic rule: Pay the operation's bills on
time-but never before they are due.
Having a cash reserve can help any
fabricating business survive the gaps in cash
flow. Applying for a line of credit from the
bank is one way to build that cash reserve.
Once a business is qualified, lenders will
grant a predetermined credit limit that can
be withdrawn from when needed.
Yet another option might be frugality.
Aim to keep the business lean by constantly
evaluating it. Is the purchase of new
equipment really necessary? Is hiring new
employees really cost-effective? Weighing
the pros and cons of all business needs and
wants enables a business to retain cash flow
and avoid unnecessary expenses.
CASH FLOW GAPS
Remember, however, the cash flow gap in
most fabrication businesses represents only an
outflow of cash that might not be covered by a
cash inflow for weeks, months or even years.
Any business, large or small, can experience
a cash flow gap-it doesn't necessarily mean
the business is in financial trouble.
In fact, some cash flow gaps are created
intentionally. That is, a fabricator will
sometimes purposefully spend more cash
to achieve some other financial results. The

business might, for example, spend extra
cash to purchase additional inventory to
meet seasonal needs, to take advantage of
a quantity or early payment discount, or to
expand its business.
Cash flow gaps are often filled by external financing sources: revolving lines of
credit, bank loans and trade credit are just
a few external financing options available
to most businesses.
CASH FLOW LOANS
Cash flow-based loans rely on the value of
the operation's cash flow. If the operation
has a strong cash flow stream, it can be used
to get significant loan amounts even if there
are few business assets. Although cash flow
loans can be expensive, they play a key role
in a business that is expanding.
An advantage of cash flow loans is the
repayment period. These loans are usually
designed according to the needs of the
borrower, with repayment periods often
between five and seven years. And, since cash
flow loans are different from asset-based loans,
rarely does collateral have to be put up.
FLOWING CASH FLOWS
Assessing the amounts, timing and uncertainty
of cash flow is the most basic objective of
cash flow management. Positive cash flow
indicates the liquid assets of a business are
increasing, enabling it to settle debts, reinvest
in its business, return money to shareholders,
pay expenses and provide a buffer against
unanticipated financial challenges. The impact
of a negative cash flow can be profound, with
many businesses operating on margins so thin
that frequent lost opportunities will put them
on the path to closing their doors.
Obviously, every business can improve
its cash flow. Of course, for this to happen
businesses need to adopt best practices in the
way they invoice, follow up with customers
and monitor outflow. With the help of a
qualified professional, these cash flow best
practices may be easier to achieve.
Mark E. Battersby writes extensively on business,
financial and tax-related topics.

54 REVIEW MAY 2020

0520RV_p49-57.indd 54

4/18/20 10:58 PM



Specialty Fabrics Review May 2020

Table of Contents for the Digital Edition of Specialty Fabrics Review May 2020

Specialty Fabrics Review May 2020 - Cover1
Specialty Fabrics Review May 2020 - Cover2
Specialty Fabrics Review May 2020 - 1
Specialty Fabrics Review May 2020 - 2
Specialty Fabrics Review May 2020 - 3
Specialty Fabrics Review May 2020 - 4
Specialty Fabrics Review May 2020 - 5
Specialty Fabrics Review May 2020 - 6
Specialty Fabrics Review May 2020 - 7
Specialty Fabrics Review May 2020 - 8
Specialty Fabrics Review May 2020 - 9
Specialty Fabrics Review May 2020 - 10
Specialty Fabrics Review May 2020 - 11
Specialty Fabrics Review May 2020 - 12
Specialty Fabrics Review May 2020 - 13
Specialty Fabrics Review May 2020 - 14
Specialty Fabrics Review May 2020 - 15
Specialty Fabrics Review May 2020 - 16
Specialty Fabrics Review May 2020 - 17
Specialty Fabrics Review May 2020 - 18
Specialty Fabrics Review May 2020 - 19
Specialty Fabrics Review May 2020 - 20
Specialty Fabrics Review May 2020 - 21
Specialty Fabrics Review May 2020 - 22
Specialty Fabrics Review May 2020 - 23
Specialty Fabrics Review May 2020 - 24
Specialty Fabrics Review May 2020 - 25
Specialty Fabrics Review May 2020 - 26
Specialty Fabrics Review May 2020 - 27
Specialty Fabrics Review May 2020 - 28
Specialty Fabrics Review May 2020 - 29
Specialty Fabrics Review May 2020 - 30
Specialty Fabrics Review May 2020 - 31
Specialty Fabrics Review May 2020 - 32
Specialty Fabrics Review May 2020 - 33
Specialty Fabrics Review May 2020 - 34
Specialty Fabrics Review May 2020 - 35
Specialty Fabrics Review May 2020 - 36
Specialty Fabrics Review May 2020 - 37
Specialty Fabrics Review May 2020 - 38
Specialty Fabrics Review May 2020 - 39
Specialty Fabrics Review May 2020 - 40
Specialty Fabrics Review May 2020 - 41
Specialty Fabrics Review May 2020 - 42
Specialty Fabrics Review May 2020 - 43
Specialty Fabrics Review May 2020 - 44
Specialty Fabrics Review May 2020 - 45
Specialty Fabrics Review May 2020 - 46
Specialty Fabrics Review May 2020 - 47
Specialty Fabrics Review May 2020 - 48
Specialty Fabrics Review May 2020 - 49
Specialty Fabrics Review May 2020 - 50
Specialty Fabrics Review May 2020 - 51
Specialty Fabrics Review May 2020 - 52
Specialty Fabrics Review May 2020 - 53
Specialty Fabrics Review May 2020 - 54
Specialty Fabrics Review May 2020 - 55
Specialty Fabrics Review May 2020 - 56
Specialty Fabrics Review May 2020 - 57
Specialty Fabrics Review May 2020 - 58
Specialty Fabrics Review May 2020 - 59
Specialty Fabrics Review May 2020 - 60
Specialty Fabrics Review May 2020 - Cover3
Specialty Fabrics Review May 2020 - Cover4
https://www.nxtbook.com/ata/specialtyfabricsreview/specialty-fabrics-review-october-2022
https://www.nxtbook.com/ata/specialtyfabricsreview/specialty-fabrics-review-september-2022
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-august-2022
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-july-2022
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-june-2022
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-buyers-guide-2022
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-may-2022
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-april-2022
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-march-2022
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-february-2022
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-january-2022
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-december-2021
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-november-2021
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-october-2021
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-september-2021
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-august-2021
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-july-2021
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-june-2021
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-buyers-guide-2021
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-may-2021
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-april-2021
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-march-2021
https://www.nxtbook.com/ifai/specialtyfabricsreview/specialty-fabrics-review-february-2021
https://www.nxtbook.com/ifai/specialtyfabricsreview/0121RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/1220RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/1120RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/1020RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0920RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0820RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0720RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0620RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/RVBG20
https://www.nxtbook.com/ifai/specialtyfabricsreview/0520RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0420RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0320RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0220RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0120RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/1219RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/1119RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/1019RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0919RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0819RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0719RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0619RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/RVBG19
https://www.nxtbook.com/ifai/specialtyfabricsreview/0519RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0419RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0319RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0219RV_Feb
https://www.nxtbook.com/ifai/specialtyfabricsreview/0119RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/1218RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/1118RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/1018RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0918RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0818RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0718RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0618RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0518RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/RVBG18
https://www.nxtbook.com/ifai/specialtyfabricsreview/0418RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0318RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0218RV
https://www.nxtbook.com/ifai/specialtyfabricsreview/0118RV
https://www.nxtbookmedia.com