Methods To Improve Your Company’s Liquidity Ratio Part Two of Two
Added on April 27, 2018
A Two Part Series – Part Two of Two
Dispose Of Assets That Are Not Being Utilized
Many organizations own assets or inventory that are not being utilized. These assets are wasting valuable resources. There is no need to spend time and money to store and maintain them. Far too many business owners get caught up in the notion that they will need certain assets at some point in the future; chances are you will not. If your business has not made use of an asset for a significant period of time then give serious consideration to selling it. Many assets eventually become obsolete and worthless. The time to sell is while it still has some value in the marketplace and convert those assets to cash.
Negotiate With Vendors For Better Terms
Some vendors will not budge on price; however, some will be willing to work better deals with you in order to maintain the business relationship. Remember Benjamin Franklin’s saying, “a penny saved is a penny earned” and those pennies can add up. Vendor discounts can go a long way in helping your overall cash flow so don’t be afraid to explore those options if available. Alternatively, you can try to negotiate longer terms with some of your vendors. Even the ones that are not willing to budge on price may be willing to extend the payment cycle. If you can’t get a quick pay discount you might as well hold onto your cash as long as possible. An extra 30-60 days on payment terms can make a difference.
Establish Better Control Of Your Overhead Expenses
Negotiating better terms with your vendors is not the only way to save money. It is also important to establish better overall control over additional overhead expenses such as advertising, marketing, labor, rent, and professional fees to name a few. You may just be surprised at exactly how much money your organization is spending on these line items. Once you become fully aware, it is easy to find ways to cut down on these expenses. Here are a few examples. Rent can be a significant amount of your overall expenses. If you are not using all the space in your office consider moving to a smaller location or subletting to another business if possible. It is also a smart idea to trim the fat on payroll expenses when and where appropriate. Do not authorize unnecessary overtime, put a temporary freeze on new hires, or eliminate employees that are not performing up to your standards. Before long, your liquidity ratio will start to improve.
Navera Group provides cash management improvement solutions for organizations experiencing a wide range of cash flow issues. Our clients range from having a strong balance sheet to facing a major liquidity crisis. Our team of professional consultants dig in immediately to identify and address the issues that your business may be facing. We realize that visibility and clarity are essential components to alleviating the problem. Navera Group typically begins the process by creating a thirteen (13) week rolling cash flow forecast. During this initial phase of an engagement, we identify the root problem(s) and implement practical strategies to rectify the situation.
If your company is in a growth phase or crisis mode, our financial experts will help you to identify your issues, improve cash flow, and transform liquidity management from an afterthought to a successful business strategy. If you have any questions regarding your company’s cash flow or would like more general information about our array of services, please contact us today. Phone: 617-356-7516; Email: Info@Naveragroup.com; Website: www.NaveraGroup.com