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How do I avoid cash flow issues with growth?

Smart Cash Flow Strategies for Growth

I'll remember helping a colleague in EO whose e-commerce site was booming. Sales were up 180% year-over-year. But they were running out of cash and on the verge of missing payroll.

Growth often requires major capital investment ahead of revenue. Whether expanding facilities, hiring talent, or developing products, companies must spend before they earn. And inevitable timing mismatches between outflows and inflows can quickly create cash flow crises.

Maintaining healthy cash flow is crucial for supporting growth. Here are key strategies I recommend:

Forecast Diligently

Conduct regular cash forecasting using Scaling Up's Cash Forecast tool. Model expected cash inflows and outflows over 13 weeks. Re-forecast frequently as business conditions change. Anticipate crunch periods.

Preserve Contingencies

Secure lines of credit and maintain reserves to handle unforeseen expenses or delays. Stay conservative with projections, and don't overextend yourself financially. Make sure you have ample headroom.

Lengthen Payables

Renegotiate payment terms with vendors and suppliers to extend days payable. See if you can net 60 or net 90 terms to preserve capital before large outflows. Just don't jeopardize key relationships.

Invoice Early

Where possible within contracts, invoice customers ahead of schedule to bring in receivables faster. You can offer small discounts for customers who pay invoices quickly.

Incentivize Sales

Structure sales commissions based on cash collection, not just booking revenue. Reward salespeople who get customers to pay invoices faster.

Bill Incrementally

For large deals, negotiate structured installments tied to work milestones. Get paid as you go rather than waiting for a single payout.

Automate Billing

Use payment software and automated reminders to reduce collection delays. Customer credit cards on file enable seamless monthly billing.

With financial discipline and the Scaling Up Power of One exercise, cash flow can be smoothed to fuel growth ambitions. Let's connect to discuss strengthening your cash flow management. The time to prepare is before expansion arrives.

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