5 Ways To Find Hidden Cash

Companies that are growing need cash and they need it bad! Company owners and management must by attention to cash and continually manage both the income and the outgo of their company's cash. It has often been said that cash is the lifeblood of a company. Unfortunately it has been proven many times that a company will often allow itself to bleed cash unless someone comes along and applies pressure to stop the bleeding! Here are some great way to preserve cash.

1. Stretch you acounts payables: this is the time-honored system to hoard cash, but many companies go about it in the wrong way.  They simply don’t pay on time, earning a bad credit rating.  Do it the right way.  Call up your suppliers and either ask for a short term extension on payment terms or negotiate new terms for an on-going basis.  This preserves your cash and your credit rating.

2. Declare a “Financial Dictatorship”:  At times of severe cash shortages or declining profits you can immediately change your purchasing processes for a short period of time – usually one or two months.  Suspend all budgets and require that ALL purchases be re-approved.  All prior approvals are invalid.  Appoint only senior managers as “Financial Dictators”.  Require the requestor make a case for his purchase including new cost comparisons.  This is a great way to discover wasted dollars and make everyone cost conscious.

3. Utilize Contract Staffing:  Contract staffing allows you to really stretch your cash.  The Staffing Company will pay the payroll, taxes, health benefits and all of the associated costs with an employee for an entire month before issuing you an invoice.  Then you have 30 days to pay that invoice.  You may even be able to negotiate longer terms (see # 1).  This gives you 60 days or more to pay what is often your largest expense – your staff.  And you get the benefit of the Staffing Company’s expertise with recruiting and human resources.

4. Outsource non-core competencies:  This is a version of # 3 above and gives you the same benefits.  It is common for companies to outsource cleaning services and payroll services.  But how about outsourcing your mailing room, local deliveries or call-in center.  Take a new look at what is core to your company and what could be better handled by another company.  Again you save cash by stretching the time you have to pay for the service.

5. Take a new look at all of your costs, including soft costs such as insurance, employee benefits and bank fees.  Make sure you are paying for only what you need.  Get competitive quotes and re-evaluate your requirements.  One company found they were paying $5000/year for insurance they no longer needed.  Another company switched banks and cut their bank fees by 60%.  A third company got an energy audit and was able to find a 15% savings on their electrical bill.  It’s worth the time to take a new look.