Have you checked out the Financial Crimes Enforcement Network (FinCEN) YouTube page?
They recently hosted an information session on their channel about Beneficial Ownership Income reporting aka ‘BOI reporting’. It is something all corps and LLCs will need to make sure they are complying with by the end of the year.
If you aren’t complying with these BOI regulations and the deadline passes, the cost is $591 per day!
Cash flow is already a big enough problem for businesses… no need to add insult to injury by missing government requirements.
There are as many sources of cash flow drain as there are small businesses in America, so I’m not going to try to summarize all of them.
But I can share a few things that don’t get a lot of coverage but that are issues. Let’s get you on the positive side of the cash flow equation today.
Moving Your Business Toward Positive Cash Flow
“If I had to run a company on three measures, those measures would be customer satisfaction, employee satisfaction, and cash flow.” – Jack Welch, Former General Electric CEO
We’ve all heard the mantra that “cash is king.” But how do we as business owners keep that cash flowing and live in the land of positive cash flow?
First thing to note is the cash-flow killers — the often-overlooked money drainers that can cripple your ability to invest, grow, and weather the unexpected.
Here’s 5:
Invoicing Automation – Are you manually invoicing when you could automate them, speeding up collections?
Studies by Aberdeen Group show automated invoicing can reduce invoice processing time by a whopping 80 percent. Faster invoicing cycles means getting paid faster, helping you keep more cash on hand, with less Accounts Receivable (AR).
And since 9 in every 10 businesses report that, on average, invoices get paid late, it may be something to consider.
Annual vs Monthly Subscriptions – Annual subscriptions are often less expensive but can those annual subscription costs be gutting your cash flow when you need it most?
Beware the cash flow trap on this one. That big chunk of money upfront might come at a time when you need it most, like for seasonal inventory spikes or unexpected repairs.
Consider switching to monthly payments if the cost difference is negligible or less important than your need for positive cash flow. Or stagger annual subscriptions throughout the year.
Buying in Bulk – We all know inventory buying gets cheaper the more you buy. But is that bulk deal hindering your ability to pay your other bills or make important investments?
A different idea: consider just-in-time inventory management. This strategy allows you to order inventory closer to when you actually need it, minimizing storage costs and keeping your cash flowing freely.
Customer Churn – If you can predict times when customer churn spikes seasonally, consider a preemptive strike.
By analyzing your customer data, you can launch strategic counter-attacks – targeted discounts before renewal periods, exclusive sales during churn spikes, or well-timed introductions of new products to keep customers engaged.
Not Planning For Growth – That business boom can cause more problems than benefits when you’re not prepared for the increased hiring needs, operations expenses, or inventory expansion.
Put a savings/reserve plan in place now, if you don’t already have one. A healthy cash savings account can free you up to invest in growth when the opportunity presents itself.
But what about invisible cash flow killers? Are there hidden factors specific to your industry that could be silently draining your resources? This is one of the things we discuss with my CFO Services:
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Cash is king,
David Tunstall, CPA