Cash Management Strategies to Help Your Business Navigate Rising Costs

With the market in a state of financial flux, business owners may need to take new approaches when it comes to managing money. Strategically paying expenses by evening out cash flow, and knowing when and where to invest are key components to a successful cash management plan. Making sure you have enough cash invested, savings set aside and cash kept on hand to keep your business running smoothly is a learned practice — and it’s all about balance.

Protect Yourself When Investing
Many business owners are cutting back on expenses and hitting pause on hiring. When costs are on the rise, strengthening your cash reserves may seem like the obvious choice — but liquidizing your investments comes with risk. You gamble with the chance of selling prematurely and could find yourself losing out on money when the market fluctuates again.

Rather than selling, consider a strategic shift into defensive investments that can hold up during economic instability. Work with your financial advisors to ensure your profile is balanced and that your current investment plan can hold up during fluctuations. With proper planning and collaboration with your financial advisors, you can steer the course during market instability and remain a long-term investor instead of trying to time the market.

Take Advantage of Credit Card Programs
Credit card features are another helpful tool that can help you strategically manage your money when costs are high. Here are a few beneficial resources you may be able to take advantage of:

• Cash Control: A business credit card feature that can increase your cash flow as credit card transactions are deferred to an account that offers credit terms and a grace period to make payments.
• Efficiency: Some financial institutions allow you to issue several card numbers under one account, with transactions posted to a central billing source. This time-saving feature allows business owners to easily pay off multiple employee credit card bills from a single account.
• Easy Account Management: Online tools can simplify your business card account transactions. Manage employee cards, and easily issue and block cards to efficiently monitor business credit card transactions.
• Rewards: Banks may offer both point-based rewards programs or cash-back rebates. Points can be used to purchase merchandise, books, travel related trips or cash back in the form of a statement credit. Some financial institutions offer earnings credit rate (“ECR”) programs that can lower banking expenses by allowing owners to apply their various banking service fees from business credit cards, merchant services or business loans against Treasury Management services like Positive Pay, to take a proactive stance against check fraud.

Even Out Your Cash Flow
Managing your business’s cash flow and planning for expenses is critical to sustaining a positive flow of income. Identifying opportunities to cut back on expenses can give your business flexibility during periods of higher prices and interest rates.

• Be sure to evaluate your supply and production costs to make sure you are getting enough return on your investments.
• Avoid paying all of your bills at the same time and spread out your expenses as much as you can to avoid running out of funds.
• Prioritize your expenses to get an idea of what bills can be postponed or rescheduled in order to stagger payments.
• Consult your suppliers. When possible, work with suppliers who are flexible and willing to provide a payment plan that syncs with your cash flow needs.

For more tips on how to better manage your cash flow, read our blog, Four Steps to Organize Your Finances For the New Year.