Select Greater Philadelphia Newsletter

SMALL BUSINESS SURVIVAL PLAN: MAXIMIZING CASH FLOW DURING ECONOMIC DOWNTURN

By Larry Wirth, senior vice president and Business Banking territory sales manager
for PNC Bank

Small business owners across Pennsylvania are working to manage through the recession by learning the keys to survival. Managing and preparing for the cash peaks and valleys that all businesses experience becomes even more critical when times are tough. After all, cash flow is everything to a small business.

The impact of the economic environment on a business' cash flow is a major concern. In the latest results of the PNC Economic Outlook survey, only 19 percent of Pennsylvania business owners expect their cash flow to increase in the coming months.

In order to help weather the storm and cope in today's economy 87 percent of businesses plan to reduce or eliminate expenses, 73 percent plan to reduce capital spending, 79 percent plan to conserve cash and maintain more bank deposits and 65 percent plan to collect receivables more quickly.

When times are tough it is especially important to take stock of the small business tools at your disposal, analyze operations, understand your business needs and then choose the right combination of cash flow options to manage your finances more effectively.

Here are a few things you should consider to make the most of your business money:

Accelerate the Collection of Payments
You can improve your cash position by streamlining your systems for collecting payments and giving customers multiple payment options. Remote deposit services also allow you to easily and securely deposit checks without ever leaving the office.

Improve Processes for Making Payments
A variety of new technologies are available to help you enhance your cash position by giving you more control over the timing of payments, while also reducing time and costs. Consider online services to make paying your employees and payroll taxes more efficient.

Invest Your Excess Cash Effectively
Start a business money market account or business certificate of deposit to put that extra cash to work for you.

Utilize Online Reporting Tools
Online information reporting tools, including online banking, can help you make better business decisions by providing you with real-time information on your cash position.

Explore Solutions for Cash Shortfalls
Establishing a business line of credit that you can access in the event of a cash shortfall or to take advantage of an unexpected opportunity will ensure that you will always have cash on hand when needed.

Larry Wirth is senior vice president and business banking territory sales manager for PNC Bank's Southeastern PA region. To find out if you have the best solutions for the changing needs of your business, talk to your local PNC Business Banker, stop by your nearest PNC Bank branch, call 1-877-BUS-BNKG, or visit www.pnc.com/cfo to learn more about CFO: Cash Flow Options.