Cash Flow: How Your Banker Can Help
By Michael Ostergren
Assistant Vice President, Business Banking
Cash is king, so it’s no surprise that lack of it is a big reason small businesses fail. That’s why I advise all my business clients to pay attention to their cash flow and work hard to make sure more money is coming in than is going out.
Of course, that’s easier said than done, especially in the early stages of a new business or with seasonal business, both instances in which expenses often outweigh income. But regardless of what type of business you have or the stage it is at, you need sources of cash to ensure positive cash flow.
That’s where a banker who understands and believes in you and your business can add value by helping you secure access to business loans, credit cards, lines of credit, merchant services, and more—all services that can help you maintain positive cash flow.
Of course, you’ll want to find a banker before you need one. And then, you’ll want to invest in that relationship by meeting regularly and talking openly about both your business and your personal finances. That way, when you need a bit of extra capital to maintain positive cash flow, you have a trusted partner who already knows you—and believes in you.
It also helps to know how to manage and forecast your cash flow. Surprisingly, I see many business owners struggle with this, often thinking they’re operating in the black without first taking into account upcoming bills, seasonal lulls, federal and state tax obligations, and other factors that affect cash flow. Then, when they realize they’re about to run out of cash, they panic.
I can help make sure this doesn’t happen to you. Come in, sit down, and tell me your story. What got you interested in your business? What are your plans for the future?
Bring your cash flow statement along, and together we’ll analyze it to see where your business is today and where you can expect to be in in the next 12 to 36 months if business stays the same. I’ll also help you think through what will happen to your cash flow if sales skyrocket—or plummet.
And, if you don’t already have your own way of tracking cash flow, I’ll send you home with my cash flow template, as well as my income statement and balance sheet templates, all of which include ready-made formulas so you won’t have to reinvent the wheel.
In the meantime, here are three cash-flow tips to keep in mind:
- Tip #1: The past does not predict the future. Just because a vendor has always extended generous terms to you, doesn’t mean he or she will do so moving forward. And a client that has always paid upfront could end up being 90 or even 180 days delinquent.
- Tip #2: Think long-term. Where will your business be in the next 12, 24, or 36 months? What will happen when the three-year contract with your largest customer comes up for renewal? How quickly will the state-of-the-art equipment you purchased this year become obsolete? Thinking through these and other questions can help you make better-informed decisions.
- Tip #3: Take advantage of your bank’s cash management services. These services include remote deposit, automatic sweeps, and the ability to use electronic funds transfer to make payments on the last day they are due. Merchant services that keep credit card transactions flowing smoothly without any hidden fees or costly delays can also help maintain positive cash flow.
For more tips or to schedule an appointment to talk about how North American Banking Company and I can help you keep the cash flowing, call or email me anytime at 651.628.6628 or email@example.com.
The son of a banker mother and an accountant father, Michael Ostergren has been a business banker with North American Banking Company since 2012. He lives in St. Paul with his wife Bobbie and son Isaac.