Four successful Santander small business clients offer insights on cash flow based on their personal experiences.

You run a profitable and growing business. Sales are strong. You’re hiring new employees. The future is brighter than ever. And yet, there is one element of running your business that could end your run of success in an instant. We’re talking about cash flow. Making payroll, buying inventory and keeping the lights on all require cash. Business owners consistently cite managing cash flow as one of their greatest challenges, and more than half of small business leaders have experienced a cash flow issue over the life of their company.1

Cash flow may seem like an easy concept—simply calculate and track your cash earned vs. cash spent. But skillfully managing cash flow makes use of strategies like watching for patterns in your business, planning ahead and maintaining positive relationships with clients, suppliers and bankers. To understand some of the best practices in managing cash flow, Santander spoke with a group of successful entrepreneurs to get their thoughts, and they came back with some excellent tips that any business can use.

“Cash flow is the lifeblood of a business and it’s one of the strongest forces that drives growth and success.” – Jerome Menchel, Chief Operating Officer, Bluestone Management

Carefully Manage Invoices and Receivables.

Let’s start with the basics. Maintaining cash flow requires organization when it comes to invoices and receivables. Jerome Menchel stressed the importance of staying on top of them: “As long as you’re constantly invoicing into your account, receivables are up to date and your company keeps collecting all that you’re owed, that’s going to help you the most in terms of growing the business.” He speaks from experience. Regarding the early days of his company, Bluestone Management, Menchel said, “I wasn’t on top of the receivables at that point and all of the sudden at the end of the day when I needed to do payroll, there just wasn’t enough cash and all the receivables hadn’t been collected.” To prevent this kind of dilemma, Menchel suggests dedicating staff to monitor invoices, receivables and cash flow patterns to ensure that billing goes out promptly and that the business collects what it is owed in a timely manner. In this way, you can maintain an accurate picture of cash coming in and avoid surprises.

Manage to the Ebb and Flow of Your Business.

Knowing the patterns of your company’s cash flow allows you to make decisions based on predictable factors. The more knowledge you have of your business and its cycles, the better your decisions will be in regard to cash flow. Marc Simon, CEO and owner of Simon & Simon, understands the importance of this: “Knowing the cycles of large and small cash amounts in your bank account is critical. It’s key to managing and protecting cash flows.” Simon knows that his business’ cash flow is stronger at the end of the year and much weaker in the beginning of the year. Having recognized this pattern, Simon is able to make better decisions for his business: “Starting projects in the first quarter with huge outlays of cash, infrastructure and technology in my business is a death knell. Starting projects in the fourth quarter, where we know we’re going to have a strong cash position, is a much more sound business strategy.” For business owners, understanding these kinds of trends allows you to effectively plan ahead and anticipate outflows and inflows of cash.

Plan Ahead.

Once you’ve figured out the ebb and flow of cash for your business, the next step is to plan for the future. The management team at Croton Watch realized the importance of planning ahead after tragedy struck the business. “Hurricane Sandy almost put our company out of business. We had a 20,000-square-foot warehouse in New Jersey and it was totally destroyed. Had we not really planned properly and had people supporting us and working with us, we would not have survived,” explains Lenny Rosenbaum, the Chief Financial Officer at Croton. So, what steps can you take to plan ahead? Jerome Menchel suggests establishing a cash reserve to cover your business in the event of unforeseen financial challenges: “We generally take five percent of every check and put that into a reserve. We’ll consistently build that up.” Another way to plan ahead is to obtain a line of credit from your bank. For Stu Perlmutter, owner of Akers Industries, planning ahead was a must during the 2008 Beijing Olympics. During that time, Akers’ main suppliers in China shut down production for weeks. Perlmutter had to apply for a temporary increase on his line of credit in order to stock up on inventory. Without the line, he would not have been able to keep his business going. Croton’s president, David Mermelstein, said that planning for cash flow is essential to any business’ success. “You have to be very honest with yourself. And make sure that when you’re doing your planning, your budgeting and your plans for growth you take a very, very realistic approach,” he said. Planning ahead allows your business to effectively manage its cash flow in the face of both expected and unexpected events.

Maintain Good Relationships.

Believe it or not, maintaining a positive reputation among clients and suppliers can help to improve your cash flow. For Stu Perlmutter, the goodwill gained from having a solid reputation can be something to fall back on when cash is running low: “When you have a reputation, you can rely on that. Whether you do or you don’t, you’ve got to build it.” Gaining trust from suppliers, clients and your bankers will generate loyalty to your business and, potentially, more cash. Positive relationships can lead to more favorable credit terms and discounts from your suppliers, credit approvals from your bank and prompt payments from happy customers. Each of these can positively impact your cash flow.

Featured Businesses

  • Bluestone Management is a mortgage field servicing company based in New Jersey, with operations in six states.
  • Simon & Simon is a personal injury law firm based in Philadelphia and has been serving clients for 8 years.
  • Croton Watch was established in 1991 in New Jersey. The company manufactures and distributes brands of luxury watches.
  • Akers Industries is a family-owned business based in Massachusetts that imports and distributes disposable gloves.
Following these tips can help you to effectively manage your business’ cash flow.

If you would like more information about how Santander can help, visit or schedule an appointment today.

1. QuickBooks State of Cash Flow Report, 2019.

This article is for promotional purposes only. Santander Bank, N.A. (“Santander”) does not provide investment, business, financial, accounting, tax, or legal advice, and the content of this article does not constitute investment, business, financial, accounting, tax, or legal advice. Santander does not make any claims, promises, or guarantees about the accuracy, completeness, currency, or adequacy of any content. Santander expressly disclaims all express and implied warranties of accuracy, completeness, currency, or adequacy of the information and content in this article. Readers should consult their own attorneys or tax or other advisors regarding the applicability of any referenced information or financial or other strategies to their own unique circumstances. This article does not necessarily reflect the views or endorsement of Santander.

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