Why Having a Handle on Cash Flow Matters

Over the last couple of years, COVID PPP, EIDL and ERTC refunds flowed into the market saving a lot of struggling businesses. Now that we’re past COVID (from a business perspective), businesses are struggling with other issues – supply chain disruption, inflation, staffing – with no backstop of extra money. This creates the perfect storm for cash flow issues.

The time to look at cost containment was when government money was flowing in. But many business owners probably didn’t do so and now, they’re struggling again. That’s why it’s imperative to have a handle on cash flow before there’s a crisis.

As a general rule, owners should have a thirteen-week rolling cash flow forecast based on the revenue they expect to generate so they can be prepared for possible crisis scenarios like these:

  • When revenue is up, costs go up before the cash coming in catches up. Without the correct financing in place, business owners face a cash flow issue.
  • When revenue goes down, if business owners haven’t cut expenses enough in preparation for a cash crunch, there could well be a cash flow issue.

Seat of the pants cash management – seeing what checks come in to determine what bills to pay – isn’t sustainable nor is it good business. Anticipating cash flow and planning accordingly is the better strategy.

About Celtic Capital
Companies looking for working capital to cover operating expenses, fund growth, increase buying power and take advantage of vendor discounts and rebates turn to Celtic Capital. With an appetite for the more complex transactions, Celtic Capital has a history of success in crafting creative, flexible asset based financing solutions from $500,000 to $5 million with no financial covenants.

As an independent lender, working with companies nationwide, Celtic Capital is willing and able to alter price and deal structure and expand lines of credit to handle its clients’ increased revenues; and when cash flow is an issue, will look toward providing an inventory facility to help offset lost cash flow.

If you know of, or are, a business in need of non-traditional financing, contact Mark Hafner at 800.742.0733 or mhafner@celticcapital.com, or visit us at www.celticcapital.com.