Cash flow management considerations for business owners

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Many business owners struggle to find time to focus on improving cash flow. Yet, you may not realize how much a lack of attention to cash flow may be costing you.

As a business owner, you may have experienced cash flow problems from time to time. You’re not alone, as a majority of small businesses—61%— struggle with cash flow. However, you may not have considered how cash flow issues can impact your business both in the short and long term.

The potential for serious consequences

Not making cash flow management a priority can introduce substantial risks for your business. It can hinder growth by preventing you from broadening your product or service offering or investing in vital capital projects. It can also impact your ability to hire and retain top talent, especially amid the current worker shortage when companies have had to pay higher labor costs to be competitive. Despite all the other demands required to run your business, it’s critical to make time to ensure you have a solid approach to managing your cash flow.

Labor costs powered ahead 3.7% on a year-over-year basis, the largest rise since the fourth quarter of 2004, as companies boosted wages and benefits in response to the severe worker shortage.

Time well spent

Many business owners struggle to find time to focus on improving cash flow. Yet, you may not realize how much a lack of attention to cash flow may be costing you. Allowing cash flow management to fall off your priority list can have significant impacts on the health of your business. Consider that, even if sales are booming, slow payments from customers combined with a lack of consistent follow up on unpaid invoices could mean trouble. The subsequent lack of available cash could affect opportunities for growth and increase your difficulty in making payments to vendors and others on time§.

On average, U.S. small businesses had $90,382 tied up in outstanding receivables—up from $43,394 in 2019, an increase of 108.2%§.

Recognizing the core issue

When problems strike, they might not even appear to be directly related to cash flow management.

The top causes of cash flow issues§:

  • 31% Decreasing sales or margins
  • 27% Not getting paid according to terms
  • 26% Lack of cash reserves
  • 25% Seasonal changes in demand
  • 23% Outstanding receivables
  • 20% Debt Payments

Looking out for you and your business

Huntington can help you address many facets of your business by bringing forward key insights, new ideas and thoughtful solutions. Connect with the business banking team at Huntington to discover the many ways we can help you grow and strengthen your business.

Related Content

QuickBooks Study: Cash Flow Woes Mean a Third of Small Businesses Can’t Make Payroll, Pay Bills. Intuit, February 6, 2019.  

Bergeron, Paul. Hiring and Benefits Costs Hit 16-Year Highs. SHRM. November 29, 2021.  

§ Quickbooks. 2021. Small business payments and cash flow in 2021: How to manage money in the post-pandemic economy. May 27, 2021. Accessed Jul 14, 2021.  

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