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Startups live and die by their cash. According to a recent CB Insights study of 101 startup failures, running out of cash is the second biggest reason why startups fail, ahead of having the wrong team, competition, and pricing issues.

Cash is Still King. How startups can manage and improve their cash flow

Profit is important, but it’s technically useless if it isn’t in hand when it’s needed. If the value of the company is stuck in inventory, unpaid invoices, and prepaid accounts, then operations can easily be disrupted when the business is short on cash. In other words, timing is everything. To avoid disruptions in growth, it’s crucial for founders to regularly examine, manage, and improve their cash flow by looking at the following.

Monitor all transactions and forecast

Start by having a proper record of all transactions. For invoices issued, track how many days outstanding, and plan around when and how to collect. For invoices received, observe due dates and frequency of recurring invoices. This information will facilitate better financial decisions about profit, loss, and opportunities for expansion. Generally, startups should budget the next 12 to 18 months of cash flow using this information. There are traditional and new cash flow management tools to make this process more efficient, and there’s always Excel.

Understand sources and cash traps

Cash from sales is great, but it’s not the only source of cash for the startup to grow. Startups should identify other cash sources, such as reserve sitting in the bank account, forms of credit, investment, or uncollected invoices. For cash traps, it’s crucial to evaluate where it’s stuck, such as cash spent on unsold inventory or pre-paying for a significant investment that generates cash at a slower pace.

Speed up cash coming in

The more convenient it is for customers to pay, the faster it will be to get cash in the account, so consider integrating more payment options like credit cards, digital wallets, or cryptocurrencies if this is an issue.

Startups with larger invoices should aggregate ones that haven’t been collected and sell them off as a package to invoice factoring services. This won’t get the full amount, but it will get money into the bank right away. The actual amount can range anywhere between 70%  to  90% of the initial invoiced amount, depending on how far off these invoice dates are and how likely the buyer can collect them. Lastly, it’s possible to ask customers to pay a deposit, have a retainer, or sell pre-loaded gift cards. Software-as-a-service startups often do this by asking subscribers to pay a full year in advance and offer a discount over paying monthly.

Slow down cash going out

It’s possible to negotiate payment deadlines with certain vendors, suppliers, and landlords. Ideally, set a range of 30 to 60 days from receipt of an invoice, but startups don’t want to push too hard as to maintain a good relationship with them. Agreeing on an instalment plan is a good middle ground, so the cash doesn’t leave all at once.

Alternatively, banks offer working capital loans. However, getting the loan approved will depend on the bank’s assessment of the startup’s current financial status, collateral, and guarantees–all of which can make the process very complicated. Startups can also use credit cards to earn extra time on when cash leaves the bank account, which can be up to 60 days from the payment date. Historically, this was not possible because landlords or employees cannot accept credit card payments, but there are now platforms that enable credit-based transactions. This method allows businesses to use their cash in the ways that make more sense for them, such as to grow and expand.

If you want to know more about cash flow, check our article about cash flow instead of profit.

初創公司的存亡,往往由他們的現金流主宰。最近CB insights進行了名為「101個初創失敗的原因」的研究,發現現金流失是導致創業公司失敗的第二大原因,排名比團隊問題,市場競爭和定價問題更高。

現金仍是王道:初創企業如何管理和改善現金流?

利潤固然重要,但實際上只要這些資金一天未到手,這些不能被動用的利潤都是無用的。假如公司的價值大部份都來自產品庫存,未被支付的發票和預付帳戶中等等,那麼當業務出現現金短缺時,業務運作很容易被影響。換句話說,利潤轉換現金的速度就是一切。為了避免業務增長受阻,創始人非常需要定期檢查,管理和改善現金流。他們可以做以下的事情:

留意所有交易和預測活動

首先,為公司每一項交易進行記錄。對於由公司發出的發票,追踪未收取款項的天數,並計劃於什麼時候,以什麼方式收集。對於收到的發票,請留意發票的截止日期和經常性發票的截止頻率。這些記錄將有助企業更清晰有效地就公司財務決策進行判斷,包括有關利潤,損失和業務擴張機會等等。正常來說,初創公司應使用以上信息去估算未來12至18個月的現金流量。在這方面,市場不乏一些現金流管理工具,有傳統的亦有新派的,都可使這個預算過程更有效率;當然還有可靠的Excel。

了解資金來源和「現金陷阱」

來自銷售的現金固然好,但它並不是初創企業成長的唯一現金來源。初創公司應該嘗試留意及開發其他現金來源,例如在銀行賬戶中的儲備金,不同形式的信貸,投資利潤或未收取款項的發票。對於「現金陷阱」企業必須審視出現問題的地方在哪:譬如是動用了現金購入的庫存未能成功售出,或是用了預付的方式購入了一項回報速度較慢的投資項目,令產生利潤的進度緩慢。

加快現金流入

客戶的付款過程越方便,現金流入賬戶的速度就越快,因此如果企業需要改善狀況,可考慮提供更多支付選項,如信用卡,電子錢包或以加密貨幣付款等等。

若初創公司的發票總金額較大,可考慮將全部尚未收集的發票整合,並將其一併售賣至發票保理服務。當然這個方式無法讓企業收取全額,但它可會讓企業的戶口即時獲得資金。最後收取的金額介乎發票金額的70%到90%之間,具體取決於這些發票的日期及買方能否成功收集款項的可能性。最後,初創公司亦可以要求客戶支付押金,支付聘請費或購買預裝禮品卡。這種支付方式於軟件服務的初創公司較為常見;他們通常要求訂戶提前支付一年的費用並提供折扣,折扣會比訂閱者每月支付更便宜。

放慢現金流出

初創公司其實可以與某些產品供應商,服務供應商或房東商討延遲付款的可能性。在理想情況下,延期付款的日數可以訂在收到發票後30到60天之間。但創業公司必須留意在延期付款,和維持供應商良好關係之間取得平衡。共同制定分期付款計劃是一個不錯的選擇,令現金毋須立即全部流走。另外,銀行亦會提供流動資金貸款。但是,貸款審批將取決於銀行對初創公司當前財務狀況,抵押品和擔保的評估;這些因素都使審批過程變得非常複雜。

初創公司亦可以透過運用信用卡,延遲現金離開銀行賬戶的時間,延遲日數可高達付款後60天。以往這種做法並不存在,因為以前的房東或員工均不會接受以信用卡支付租金或服務費。但現今世代已有不少平台以「信用交易」處理付款。這種方法為企業帶來更多可能性,讓他們以更有意義的方式動用他們的現金,配合企業增長和業務擴展。

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