Before we get into our newsletter for December, November was a record month for DEROTTO. Thank you to everyone for their trust and support.

December is one of our favorite times of the year. We enjoy everything about the holiday season. DEROTTO wishes all the best to you and your family and friends during this time of year. It is definitely a time to be thankful.

We can't help but reflect on the year that is coming to an end and prepare for the new one ahead. At DEROTTO, we want to take a moment to express our sincere gratitude to all the businesses that have trusted us with their financing needs throughout the year. Your continued support has allowed us to grow and serve you better.

It means a lot to us, all the clients who have taken the time to write a review of your experience working with DEROTTO on Google Review or the Better Business Bureau. Your feedback is crucial to DEROTTO's success. Here's to a prosperous and successful year ahead!

12 Steps to Help Manage CASH FLOW

One of the most common topics that comes up when we talk with business owners is managing cash flow. It is a delicate balance for most businesses. It is an understatement that staying on top of your cash flow is key to your business success. Don't let a few cash flow missteps put you in a money crunch. All it takes are a few smart moves to keep your company in the black. With that said, we going to use one of our favorite Christmas songs - "The 12 Days of Christmas" - to outline 12 steps to help manage cash flow - We have a bias with step #1!

1. Lease or finance equipment instead of draining your capital reserves.

One of the most common cash flow mistakes is using cash to buy a major long-term asset, instead of getting financing. Even if you feel flush right now, you may suddenly wind up short of cash if you experience a sudden revenue shortfall or rapid growth.

2. Monitor your cash flow regularly.

There are many software programs such as QuickBooks, Simply Accountant, MS Excel, etc. that make it simple to reconcile your accounts, generate reports and more. It is so important to manage incoming revenue and outgoing expenses. It may make sense to hire an accounting service to help you stay on top of your cash flow.

3. Determine your break-even point.

This is specifically important for a new company. You should know at what point your business will become profitable because it gives you an early goal to strive for and a ready-made target for projecting future cash flow. Focus your efforts on managing your cash flow with an eye toward reaching that moment when you realize your first profit.

4. Increase your sales.

Consider an advertising campaign to increase sales and grow your customer base. Marketing your business doesn’t necessarily require a lot of money. For example, using digital marketing channels, like social media, can be a cost-effective way to advertise and promote your product or service.

5. Cut costs.

Focus on recurring monthly, quarterly or annual expenses. Can you cut back on utilities, rent or payroll? Are you spending money on subscriptions or services you’re not using or insurance you no longer need? Can you renegotiate the terms of outstanding loans or leases?

6. Liquidate assets you don’t need.

Do you have equipment you no longer use or inventory that’s becoming obsolete? Consider selling it to generate quick cash.

7. Get a business line of credit before you need one.

A business line of credit is a good insurance policy against future cash flow problems.

8. Get a business credit card or working capital loan to cushion your cash flow.

Look for cards with rewards such as points you can use toward travel or business purchases. In addition to providing a cushion for lean times, a business credit card also itemizes your purchases, so it’s easier to track expenses. Another alternative is to get a short-term unsecured working capital loan to help manage cash flow. DEROTTO works with a couple of lenders that specialize in short-term unsecured working capital loans. To learn more go to click here. For businesses that have a lot of equity in free and clear equipment, then a sale leaseback to access capital may make sense. DEROTTO works with many lenders that can provide solutions for this scenario. To learn more, contact our office.

9. Stay on top of accounts receivables.

Receivables are the primary source of incoming cash for many companies and must therefore be well managed. Consider offering your customers incentives, such as a percentage off the total, for early payments. Do the math beforehand to ensure the trade-off (getting paid early) is worth the loss (less money in the long run). It might make sense to contact a factoring company to borrow against unpaid receivables. DEROTTO works with a couple of factoring companies. To learn more, contact our office.

10. Stay on top of accounts payable.

Figure out the happy medium between how late you can pay your suppliers, vendors, and other creditors without risking late fees or harming your relationship or negatively affecting your credit bureau. This keeps the cash in your account as long as possible.

11. Maintain some cash reserves.

It is a rare business that doesn’t, at some point, experience a cash shortfall. Make it a priority to put aside money on a regular basis as an insurance policy against an inevitable cash shortfall. Maneuvering cash shortfalls is one of the keys to maintaining a successful business.

12. Ask for deposits or partial payments on large orders or long-term contracts.

For example, a building contractor or website developer might charge a 10% deposit upfront before beginning to draw up plans for the project, then charge 40% at the half point of the project and the balance upon completion. Charging this way, the company generates enough cash to finance expenses and pay the workers needed for the job.