Business Management

 Cash Conservation

Conserving cash flow can create benefits in economic conditions facing business today. When business is in a low or slow growth pattern, cash is very important and if you don’t have cash when you need it the most operations can be constrained.

Conserving cash flow may not be easy for those businesses that have been used to having the money to spend at any time. However, when the time comes that some belt-tightening would be necessary, some practical cash flow conservation methods may be prudent.

Here are a few tips to conserve cash:

·       Spend wisely. Make sure that purchases are made for need to have not nice to have items. Items should have a good use in the business producing revenue where possible.

·       Ensure new employee hiring is necessary. Employee salaries are a significant cash drain so efforts to maximize productivity from current employees are paramount.

·       Try leasing equipment. Leasing vs buying can be an important option since equipment purchasing can be a serious cash drain.

·       Plan ahead. Make sure you forecast financial activity. A plan outlining expected revenues and expenditures is vital to understanding cash needs. You certainly want no surprises on cash flow activity.

·       Renegotiate leases. Rent is often a sizeable fixed cost that can be negotiated. Speak with your landlord; there may be an opportunity to downsize or even temporarily obtain rent reductions. Landlords often prefer to accept lower income than losing tenants.

·       Go to the clouds. If your business is large enough to have in-house servers you are aware of the maintenance costs. If business is increasing this may be a cost effective way to create additional capacity without buying expensive new servers.

Business owners should share their cash flow objectives with other key managers to ensure every opportunity to maximize cash savings is realized.