Eight Ways Maryland Small Business Owners Can Weather the Recession

Take time to prepare cash flow projections for the next 12 months and revise weekly if needed.

2. Know your key drivers and manage them

Keep a careful eye on areas that affect cash flow: accounts receivable collections and inventory turnover. How are you doing compared to past performance and your peers? Watch key areas that affect profits, net and gross margins, labor and fixed asset utilization.

3. Monitor Accounts Receivables closely

Process invoices immediately, distribute an outstanding accounts receivable statement weekly and take action on late accounts immediately. Start with a polite but firm personal call and don't get off the phone without a commitment to a payment date. A few days improvement in collections will make a huge difference in cash flow.

4. Insist on good financial data

Accurate, timely financial statements are critical in tight economic times. Don’t accept excuses.

5. Get funding now!

The worst time to get financing is when you are about to run out of cash. Arrange for loans and lines of credit before you need it. Your cash flow projections from tip one will help you figure out how much you’ll need and when you can pay it back.

6. Review your long term financing

Are you financing long-term growth (or assets) with short-term funding such as a credit line? If so, see your banker about getting it changed.

7. Have good advisors and use them

Make sure you have a solid team of outside advisors, meet with them regularly and listen to what they say.

8. Stay close to your clients
 

This will generate good will for you, give you a chance to spot new opportunities and provide an early warning in the event their industry isn’t doing well.