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  #51  
Old 08-14-2013, 11:42 AM
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Patriot Services Patriot Services is online now
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Quote:
Originally Posted by grassmonkey0311 View Post
No way. If one of those 5 dumps you, thats a huge dent in your pocket. 500 is more of a headache, but more of a steady income.
Agree with you here. Can't keep eggs in one basket. Commercials will jump ship for 10 bucks. Some companies its a policy to go with low bidder regardless if you did a great job last contract. I keep 90 days cash on hand. That means if cash flow stopped today I could cover operating expenses for 90 days. Think of it as corporate rainy day account and any company with employess needs that kind of safety cushion. Now you need to deal aggressively with slowpays. I found prepay to be most effective. Late fees and other threats don't mean much to those people. Its simple, no pay no service. Send out a blanket letter outlining new terms. Send it to your problem people. If they bail they saved you the prob of dumping them with a balance owed. If you need to trim payroll after the dust settles than so be it. It sounds like the OP is hand to mouth himself and may need to look in the mirror for savings.

Last edited by Patriot Services; 08-14-2013 at 11:48 AM.
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  #52  
Old 08-14-2013, 07:08 PM
newguy123 newguy123 is offline
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Originally Posted by Mark Oomkes View Post
Now this ^^^^^^ is a very intelligent post.

Not your fault as newguy totally missed the point, but you are absolutely correct and this thread is now off topic. Sort of.

Lose 20% of your business in one customer getting rid of you and you will have cash flow issues. So I guess we are back on track now............sort of.

seabee continues to give great advice, but until the OP answers some questions, this thread is going nowhere.
Easy with accusations...I'm sure you cannot read my thoughts.

Try again Marky.
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  #53  
Old 08-15-2013, 08:57 AM
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JFGLN JFGLN is offline
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Quote:
Originally Posted by seabee24 View Post
The OP said "cash flow issues" , not profitability issues

Granted he might not know the difference between the two.

If he truly has a cash flow issue. He may or may not be profitable. But his current problem is caused by him having to pay out his labor and bills before he is paid. Solutions are

1. Get paid sooner from multiple methods
2. Save money in an account to help with float time
3. Reduce amount you pay out
4. Change the terms of when your payouts are due

If he has a profitability issue and is having cash flow problems because of not being profitable

1. Don't charge enough
2. Charge enough per hour but are in efficient
3. Bid jobs too low
4. Have high direct costs
5. Have too high over head
This is the correct answer to the OPs question. I would also set up a line of credit with your bank.
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  #54  
Old 08-15-2013, 10:27 AM
Mark Oomkes Mark Oomkes is online now
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Originally Posted by JFGLN View Post
This is the correct answer to the OPs question. I would also set up a line of credit with your bank.
Only if all else fails.

It is a good idea to have one and not need it, sort of like a parachute. But if anyway possible one can avoid dipping into it, I would.
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  #55  
Old 08-15-2013, 11:06 AM
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Patriot Services Patriot Services is online now
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Originally Posted by JFGLN View Post
This is the correct answer to the OPs question. I would also set up a line of credit with your bank.
Cash on hand is best. Ask Procut about the pitfalls of using lines of credit. When the economy tanked the bank froze his line and converted it into a loan with outrageous monthly payments. Not that he did anything wrong, the bank decided to limit its exposure. That's an instant out of business sign right there.
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  #56  
Old 08-15-2013, 05:08 PM
Mark Oomkes Mark Oomkes is online now
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Originally Posted by Patriot Services View Post
Cash on hand is best. Ask Procut about the pitfalls of using lines of credit. When the economy tanked the bank froze his line and converted it into a loan with outrageous monthly payments. Not that he did anything wrong, the bank decided to limit its exposure. That's an instant out of business sign right there.
Properly managed LOC's are just fine. If you read everything that Procut said, it was more his fault than the banks. He was taking a ton of cash out of the business and not paying down debt.
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  #57  
Old 08-16-2013, 08:49 AM
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snomaha snomaha is online now
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Having a LOC is a great way to bridge the gap during busy times when A/R is large and payables are coming due. Have seen alot of business owners get in trouble when they start funding operations with the LOC.
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  #58  
Old 08-16-2013, 09:00 AM
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White Gardens White Gardens is offline
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We take out a small line of credit every April, and pay it off by the first of June at the latest.

The biggest issue for us is the initial start up in late March through April. All of our billing is done at the end of the month, so seasonal start up costs such as payroll and any equipment maintenance will eat up any reserve you have left from the winter.

But, by Mid-June at the latest, we have enough cash flow to pay off any early season debts and start socking money away in business savings.

The goal in the next two years is to be able to have an un-touched reserve every spring in order to not have to pull any line of credit out at start-up time.



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  #59  
Old 08-16-2013, 11:34 PM
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cpllawncare cpllawncare is offline
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My LOC is my cash account built from profit money! If your profitable you should be socking away cash, every small business runs into cash flow issues eventually, it's how they deal with it that makes the difference.
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  #60  
Old 08-17-2013, 01:34 AM
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94gt331 94gt331 is offline
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Quote:
Originally Posted by cpllawncare View Post
My LOC is my cash account built from profit money! If your profitable you should be socking away cash, every small business runs into cash flow issues eventually, it's how they deal with it that makes the difference.
Yes exactly. We all have tight weeks sometimes. You got to be smart and save as much when you can for problem weeks. I wouldn't even try to be in buisness if I didn't have at least 10% of my yearly sales in the bank. I seen alot of my firends try there own buisiness start up and they haven't made it, they do good work they just can't manage and save extra money.
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