What's In Your Wallet? Better Be Cash

This financial crisis has the potential to pose some significant challenges to keeping your business solvent, and you're going to have to pay attention to some key points to weather the upcoming storm.

In my 20-plus years of working with high-tech solution providers, the single biggest problem that has crashed more businesses than any other is cash flow. Now there are a lot of reasons why cash flow, or the lack of enough money to pay the bills, occurs, but you need to be diligent in your assessment of cash flow over the coming months.

	ROBERT FALETRA
Can be reached via e-mail at rfaletra@everythingchannel.com.

Regardless of the form that the Wall Street bailout takes, credit is very likely to get tighter before it gets looser. The reason our country is in this mess is because the Democrats pushed the credit suppliers to loosen the requirements needed to qualify, the Republicans went along with it and certainly didn't stop them, and the greedy money grabbers on Wall Street were all too willing to get rich quick.

Now businesses of all sizes—including yours—are going to find credit to be very tight for the future. So, step one is to shore up your credit line. Is it still readily available? Do you need to requalify? Should you look into alternative credit lines? These are all some of the questions you should be asking yourself.

Second, you need to be prepared for a slowdown in the pace at which customers pay their bills. It's always difficult to know how solvent your customer base is. How do you know if the cash flow of individual customers is enough for them to meet their obligations? Fact is, you don't know. So it's probably prudent to expect a higher percentage of the customer base to be paying its bills more slowly, which is only going to put more pressure on your cash flow as you move through this financial mess.

There is no easy way to manage this type of customer problem, however, you may consider getting a larger percentage of money up front in order to protect the downside. Not being able to meet your own obligations because customers are not paying their bills on time can cause you major headaches.

This situation speaks to the need to assess where your customer base is. If you are too heavily tied to the financial community—to me that is anything more than 25 percent of sales—then I think you really need to be on the hunt for some customers in a more stable vertical.

This isn't going to be smooth sailing for anyone, so the more prepared you are for a constrained cash-flow situation the better off you'll be.

Cash is king. How are you managing the financial tsunami?
make something happen. E-mail Everything Channel CEO Robert Faletra at rfaletra@everythingchannel.com.