• Banking

Managing the Peaks and Valleys of Cash Flow

By Tricia Mininger
Business Banker
PNC Bank
Illustration by Michael Gibbs

Every small-business owner can attest to the importance of cash flow. The amount of time it takes for a dollar to pass through your business from raw material purchases to the sale of finished goods to money in the bank is a critical factor in determining success.

Regardless of your current cash flow situation, it is a good idea to occasionally take stock of the cash management tools at your disposal.

Here are a few strategies for maximizing your cash flow and making the most of your money:

  1. Develop a liquidity plan. Does liquidity “just happen,” or do you have a plan in place to manage your cash on hand? By creating a simple cash forecast to predict when payments will come in and go out, you can anticipate disruptions to your cash flow. Consider maintaining a line of credit to avoid fluctuations. If you have significant, predictable payments that occur infrequently — such as tax or insurance payments — consider a reserve fund that you grow on a consistent basis to neutralize the disruptions that these disbursements may cause.
  2. Take advantage of payment technologies. The innovative banks offer a variety of technologies that can help manage your cash flow. Traditional services like credit-card processing speed up your collections. Corporate cards help to consolidate and track spending as well as make fewer, better-timed disbursements. Automated (online) access to investment balances and lines of credit help keep your cash balance within a target range.
  3. Revisit your receivables strategy. Offering credit discounts to your customers may be a competitive requirement in your industry, but be sure to examine these practices closely. How much financing are you providing to your customers? Is every customer treated exactly the same? Are slow payers getting a free ride while you are searching for some liquidity relief of your own? When you look closely at this element of your business model, you can usually identify some opportunity to improve cash flow.
  4. Seek out inventory opportunities. Assess your inventory needs carefully, evaluate your mix of suppliers, and possibly renegotiate trade terms. Inventory always creates pressure on cash flow, and now may be the time to reevaluate your practices.

Managing cash flow is one the most important things small-business owners can do. Poor cash flow is a leading cause of small-business failure. By revisiting your contingency plans, leveraging technologies, and managing the factors that create cash flow pressure, you are better able to protect your business through good times and bad.


About Tricia Mininger

Tricia Mininger, business banker for PNC Bank, manages business and nonprofit banking relationships for clients in the Greater Washington, DC, market. She excels at finding solutions for her clients’ cash flow needs and is an expert in deposit and lending services.

Mininger also is a certified Women’s Business Advocate for PNC, one of 500 bankers in the company educated to better understand the challenges and opportunities for women in business. Mininger holds bachelor’s degrees in Marketing and Hispanic Languages and Literature from the University of Pittsburgh and is currently pursuing an MBA at George Washington University. She resides in Arlington, Virginia.

For more information, contact Mininger at patricia.mininger@pnc.com, or by phone at 202-835-2673.

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