Almost a Superstar

Some businesses are lucky enough to experience growth year after year. But fast growth can create its own set of challenges. These businesses can find themselves without the business systems in place to keep the business operating optimally. 

Based on your Business Assessment Scores, it would appear that you are in this phase of development. Because you’ve been growing quickly, you may find that you may not have the right systems in place to ensure you have enough cash on hand. This happens to a lot of successful business, who have been so focused on growth that other problems snuck in.

We want to introduce you to Art, who may have been experiencing the same challenges are you might be facing.

Art's Story

“The business is going great, but I wish it looked that way to my creditors. We’ve been growing so fast that we aren’t always that great at sending out invoices and following up to make sure that they are paid on time. We’ve been late on a few payments and have had some close calls on payroll. I know we need to get better, but if I put more people on it, I wouldn’t be able to keep growing so fast.”

Art’s business is booming. He’s grown rapidly in size, and he continues to grow quickly. Unfortunately, Art does a lot of business with both the local and federal government. So, it takes him a while to get paid for the services he provides. He has staff, overhead, and suppliers to pay monthly, and sometimes, he’s found himself running a bit short on cash.

This isn’t an uncommon problem. Everyone gets excited and likes to do the thing he or she does best. It’s easy not to focus on those areas we don’t like or don’t understand. However, that’s what can take great business down. It’s important to fix those gaps before they become major anchors weighing down your growth.

Best Talent More Often

How We Helped Art

Business Optimization

Art's business was growing and had been for several years. On paper, his business looked great, but he was having trouble paying his bills. This caused us to zero in on three areas of focus: his accounts receivables aging report, his monthly expenses, & his cash flow report

What we found:

First, Art didn't know you could run an accounts receivable aging report. This is a chart of all the money customers owe you and the time between the issuing of the invoice (completion of the work) and getting paid. Art average age was nearly 90 days. Art paid his employees every two weeks, and had all the normal monthly bills. We also noticed that Art had some seasonal spikes in his business. All of these three factors were causing havoc on his cash flow

Ageing Report Monitoring

We set up an accounts receivable aging report review every month. While Art didn't have much flexibility with his payment terms, he could have a better picture of when money should be coming in. We also created a collections role. This person would call all customers two weeks prior to the due date to ensure payment was processing, on the due date itself, AND weekly afterwards if the payment wasn't made

Fixing Cash Flow:

It was clear we needed to get some financing to fix the gap between when money was coming vs. when money was going out. Because Art's business credit had suffered a bit, we limited in the number of financing options available to us. We had to use a mix of a line of credit coupled with factoring the invoices. Neither are optimal, but we needed to take this as the first step.

Fixing Art's Business Credit

Due to the nature of the business, there was always going to be a need for cash management. We didn't want to be saddled with factoring invoices and using alternative lenders though, so we put an accounts payable tracking system in place. The person in charge of collections was also put in charge of bill paying. That way, we always had a person who knew the status of both income and spending

Fixing Cash Flow Long Term:

After a year of solid payments both on the Line of Credit and to his other suppliers, Art's business credit was substantially improved. Therefore, we were able to secure an SBA backed LOC, and we were able to close the both the alternative lender LOC and invoice factoring. This saved Art a significant amount in interest expense.

How can we help you?

(646) 543-7804

available from 9:00 – 5:00

Address 505 W. 37th St. New York, NY 10018