How We Increase Cashflow
How we increase cashflow is best demonstrated through one of our case studies.
Obviously any information shared here is with the consent of our client. Mandy Marketing LLC is an excellent marketing agency located in Massachusetts. We began working with them when they’d been in business for barely two years. They reached $850K in gross sales by the end of their 2nd year in business. Mandy Marketing has two founders and, at the time, 4-5 contractors who worked variable hours depending on how many projects were open. The founders were on payroll, and their contractors were paid as 1099 workers.
Although the business was growing rapidly, it was facing the same challenge millions of other small businesses are facing – cash flow. Mandy Marketing LLC never seemed to have enough cash at hand. They struggled to pay vendors and invest in their own marketing, advertising, and technology. The founders even had a hard time paying themselves. They could not understand where the money was going. It was hard to reconcile their success with the lack of money in the bank. The founders of Mandy Marketing LLC reached out to ISCPA to learn how we increase cashflow, and could help them.
First we mapped out and visualized their monthly cash movement.
When cash came in and out, and where it came from and went to was key in identifying the problems. One issue was that Mandy Marketing LLC’s bookkeeping reports were unclear and unreliable. We optimized their reports to be reliable, understandable and timely. After creating the reports, we found opportunities for expense reduction, which resulted in a net cash flow increase of $1,567/month!
With a clear understanding of monthly cash movement, we also noticed consistent imbalances between inflows and outflows due to the structure and timing of client invoicing and vendor payments. We recommended changes to invoicing policies and vendor payments. Once these changes were implemented, the company’s month-end net cash increased by $22,918! This was accomplished without adding a single dollar to gross sales!
Mandy Marketing is an example of how we increase cashflow, but it is not our only methodology. As specialists in tax planning, there are several possible strategies to achieve similar results for different scenarios.
If you want to examine how we can increase cash flow for your business, schedule a free consultation by clicking on this link.