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Cash Management Strategies To Navigate Rising Costs, Economic Uncertainty

by Steve Albart

With the market in an ongoing state of financial flux, business owners may need to take new approaches when it comes to managing money. Just as budgeting can support business goals under typical circumstances, establishing plans for challenging periods can help ensure successful outcomes. Financial decisions require thorough consideration before acting, but applying best practices and creative solutions can help businesses stay on track during the process.

By reviewing options for cash management and identifying which can better position a business to meet its needs, owners and leaders can navigate unusual economic circumstances in a number of effective ways. For example, strategically paying expenses to even out cash flow and knowing when and where to invest are key components to a successful cash management plan. Making sure enough cash is invested, savings are set aside and cash is kept on hand to keep business running smoothly is a learned practice — and requires balance.

Protect the Business When Investing
Many business owners have strategically cut back on expenses and hit pause on hiring. When costs are on the rise, strengthening cash reserves may seem like the obvious choice — but liquidizing investments comes with risk. This is a gamble with the chance of selling prematurely and could end up with the business 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 a team of financial advisors to ensure a balanced profile that allows the current investment plan to hold up during fluctuations. With proper planning and collaboration, businesses can stay the course during market instability and remain a long-term investor instead of trying to time the market. Mitigating risk in cash reserves can occur without taking on unnecessary risk in an investment strategy.

Take Advantage of Credit Card Programs
While organizational spending can be quickly addressed in shorter term responses to economic challenges, payment accounts themselves can provide more specialized controls designed for ongoing management. Credit card features are a helpful tool that can help strategically manage money when costs are high. Here are a few potentially beneficial resources:

- Cash Control: A business credit card feature that can increase 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 issuance of 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 business card account transactions. Manage employee cards, and easily issue and block cards to efficiently monitor business credit card transactions.

Even Out Your Cash Flow
Managing a 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 a business flexibility during periods of higher prices and interest rates. Consider the following strategies for handling payments:

- Be sure to evaluate supply and production costs to make sure there is enough return on investments.

- Avoid paying all bills at the same time and spread out expenses as much as possible to avoid running out of funds.

- Prioritize expenses to get an idea of what bills can be postponed or rescheduled in order to stagger payments.

- Consult with suppliers. When possible, work with suppliers who are flexible and willing to provide a payment plan that syncs with specific cash flow needs.

- Consider opening a business line of credit through a bank. By establishing a funding relationship before stresses arrive, businesses can mitigate their operational and financing challenges.

Steve Albart serves as Regional President, St. Louis for Enterprise Bank & Trust. He can be reached at salbart@enterprisebank.com.
 

Submitted 364 days ago
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