Gratitude-leads-to-business-success

How an «attitude of gratitude» can be your brightest company asset

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Gratitude matters when running a business, both for your mental health and for the health of your organization.

Gratitude-leads-to-business-success

In late 2019, people sat down to make their New Years’ resolutions for the coming year. Many decided to be more grateful in their daily life.

On the resolutions lists for 2020, some suggested to “repeat an affirmation related to gratitude in the morning” or to simply “look on the bright side” — or the very vague suggestion to “be good, be kind, be better.” While relatively simple to execute in theory, could it really be that simple in reality?

Little did anyone know how the world would soon be disrupted by the looming coronavirus pandemic—making gratitude more important, and even surprisingly more challenging, than ever before.

The wisdom of being grateful

You may be surprised that insights from ancient Greek thinkers could resonate with modern CEOs and business leaders, but the importance of gratitude is timeless.

The Greek philosopher Epictetus tells us, “He is a wise man who does not grieve for the things which he has not, but rejoices for those which he has.” Of course, Epictetus must have meant “wise human,” as 36% of US businesses are women-owned!

Modern psychology research supports these insights, too. In studies at leading universities, participants who focused on gratitude felt more optimistic about their lives and even visited the doctor less frequently.

Gratitude forces us to think about the “now” instead of the past and future. This means our minds become free to focus on what we can control, instead of lingering on regret or anxiety.

Sigh… Why do we focus on the negative?

Wanting to be grateful is easy, but remembering to be grateful is hard. When business and life get chaotic, counting your blessings is probably the last thing on your to-do list.

The human brain tends to focus on the negative. One example of this is “loss aversion theory,” or the idea that people care more about losses than wins. Experiments have shown that people get more upset about losing something than gaining something new.

The key to gratitude is overcoming the natural “survival instinct” that causes us to fear failure and instead learn to think slowly and deliberately.

Nobel Prize-winning economist Daniel Kahneman describes two psychological systems in his book, Thinking Fast and Slow. “System 1” is our unconscious survival mode, while “System 2” is analytical, reasoned thinking.

Business leaders know the importance of having a strategic mindset—in fact, long-term planning is key to being an entrepreneur. When facing problems in your business, leaning into gratitude and “System 2” thinking can help you make the right decisions in the long term, rather than succumbing to fear and negativity.

Try these easy gratitude exercises

So, how can you remind yourself to be more grateful on a daily basis?

One way is by starting a gratitude journal. This doesn’t have to be complicated—it’s enough to just get a notebook and jot down two to three things you’re grateful for each day. Don’t worry about repeating things or using perfect spelling.

You could also incorporate more reflection time into your daily routine. This could mean taking 10 minutes to meditate in the morning or taking a short walk at lunchtime.

The most important thing is to be consistent and make sure the new changes stick.

Becoming a grateful leader

Learning to be more grateful isn’t just helpful in your own life. It can also help you inspire others in your company.

According to the Academy of Management Insights, creating a positive “culture of gratitude” in your business can help reduce turnover and improve employee morale. There are other business benefits, too. A report from the Global Happiness Council tells us “a meaningful increase in well-being” yields on average a 10% increase in productivity.

Business leaders and entrepreneurs can encourage gratitude in a variety of ways. Forbes contributor Karlyn Borysenko has shared some stories of how small business owners have built a culture of gratitude including Indira Hodzic, owner of IMAGE MedSpa, who makes a point to share positive affirmations and quotes with her employees. Likewise, human resources consultant Rebecca Mazin encourages clients to write notes thanking employees for specific actions.

Gratitude means appreciating everyone’s contribution, celebrating even the small wins, and giving praise where it is due. It also means giving suppliers, colleagues and customers the benefit of the doubt—even when the going gets tough.

Up next: Building resilience as a business leader allows you to overcome unforeseen obstacles with ease. Learn how this soft skill is every successful leader’s secret weapon.

When business challenges seem overwhelming, access to working capital can help. For more information about business funding options, reach out and we can discuss your situation.

Virtual networking is now a driving force of business growth during the COVID age.

Ignite your virtual networking so you don’t lose valuable contacts

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Is in-person networking no longer an option? Keep the fire of your professional relationships burning with a virtual networking strategy.

Photo by Ketut Subiyanto from Pexels

Stoke the fire behind your professional network, even if face-to-face meetings are no longer an option. With a virtual networking strategy, you can breathe new life into your contacts. 

If you haven’t leveraged a virtual networking strategy in the past, get started with these four tips:

1. Do your research

If you are relatively new to using a virtual networking strategy, you may want to consider taking an online course. A good starting point is LinkedIn, which is currently offering a free course that introduces the basics of digital networking strategies. Then spend some time exploring how other business leaders in your industry are using virtual networking options.

2. Create a plan

Next, create a plan for the following week, month and quarter so you schedule your virtual networking. Book time in your calendar to regularly connect with your contacts, update your profile and publish engaging content. Set goals to stay focused and drive results. For example, you may aim to connect with three high-value existing contacts and make two new connections every week.

3. Perform a digital personal brand audit

Just as your organization must maintain its online brand identity, your social media and online identity is important for setting the tone for your personal brand. (Have you Googled yourself lately?) Start by updating your email signature, social profiles, bios and headshots. You may also want to consider asking close contacts and colleagues to leave LinkedIn recommendations (and in return, offer to leave recommendations on their profile).

4. Get personal

What are the main ways that your contacts prefer to connect with you? Focus on those first,  and then identify secondary (and potentially tertiary) touchpoints that you can leverage. Audit your contact database and update emails, phone numbers, active social handles and personal notes (such as their birthday, family member names and favourite drink). This will help you connect in the right way and add personal touches to your digital communications.

Relationships take work, and this is especially true with business connections. By leveraging a virtual networking strategy, you’ll be able to keep those fires burning until you are able to once again meet in-person.

At Liquid Capital, we understand what it takes for small, medium, and emerging mid-market businesses to succeed – because we’re business people ourselves. Our company is built on a network of locally owned and operated Principal Offices, so whenever you’re talking to Liquid Capital, you’re talking directly to your funding source and a fellow business person.

Virtual networking is now a driving force of business growth during the COVID age.

Avoid these pitfalls of expanding too fast

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Growth is exciting, but there could be unforeseen issues that pop up when your business is expanding too fast. Here’s what to avoid.

You’ve beaten the odds and despite current market conditions, your business is experiencing accelerated growth. This is a dream scenario and it’s an exciting milestone to see the signs of growth after years of diligently building upon your strategy.

But hold on there speed racer! Even if it seems to be the right time to expand, proceed with a bit of caution. If your business grows too quickly, it could derail everything you’ve worked for. 

Before putting more gas in the engine, here are three potential pitfalls of your business expanding too fast:

1. Making the wrong hires

If you’re having a hard time meeting customer demand, then you’re probably feeling anxious to hire new employees. Payroll will be one of your biggest expenses, so you want to make sure to hire individuals who seem to have the same values as your company.

First of all, you should only hire as many employees as you need. Outline the jobs you are looking to fill and ask yourself whether each one is really necessary at this point. 

Secondly, pay attention to the candidate’s experience and how well they fit with your current staff. Hiring the wrong person is hard on your company, could add turnover expenses and can hurt employee morale.

2. Spreading yourself too thin

This is a common problem that occurs from growing too fast. Owners often find it difficult to keep track of everything and manage business operations when there’s so much happening. When things become too chaotic, it’s hard to step back and get an objective look at your business needs.

Still, a certain amount of growing pains is normal when you’re expanding your business. But if your staff can’t keep up and your processes are breaking down, you should slow down. 

To proactively avoid disruptions, expect certain warning signs of business failure. It’s rare that there aren’t indicators that your business is about to start breaking down, so if you know what to look out for in advance, you stand a better chance of avoiding them.

Look out for these 5 warning signs of business failure before it’s too late.

3. Issues with customer service

When your company expands, the demand for customer service will grow as well. It can be tough to deliver the same level of service as you did when you were smaller and had fewer customers to deal with. 

The biggest sign of customer service issues is a sudden increase in complaints. Whether you have just a few or many coming in, you should always listen to and respond to these complaints immediately. On the upside, you will hopefully create a more positive customer experience in the long-term, and handling these issues will show you areas where your business can improve.

You don’t have to turn down new business

There are times when an opportunity comes along that you can’t turn down, but you need extra working capital in order to take it on. With alternative funding solutions such as Invoice Factoring, Asset-based Lending or PO Financing you can gain increased flexibility towards long-term success.

Ready for help? Access the working capital you need with Liquid Capital’s Alternative Funding Solutions.

At Liquid Capital, we understand what it takes for small, medium, and emerging mid-market businesses to succeed – because we’re business people ourselves. Our company is built on a network of locally owned and operated Principal Offices, so whenever you’re talking to Liquid Capital, you’re talking directly to your funding source and a fellow business person.

COVID is here - and it's effecting your business funding - learn from Liquid Capital how to find other sources to stay afloat.

Lost business funding? 4 tips to quickly recover.

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Take these steps to keep your company running if you have lost business funding from your bank. 

Few events are more unsettling for a business owner than losing the financial support of their bank or lending institution. Yet, part of being a resilient business leader is tackling sudden changes and coming out on top. 

As bank’s lending criteria becomes more stringent, many businesses have had to face the reality that traditional financing options aren’t available. Though there have been government programs created to help business owners, not everyone will qualify — or you may still need additional working capital.

Here’s what you can do to survive if you have lost business funding from your financial institution:

1. Update your financials

To uncover which solutions will be best for your business, update your forecasts and business plan as quickly as possible.

Perform a credit check on your company and identify any problematic areas that you can correct before approaching a new financial institution. You should also conduct a registration search to see if any of these registrations need to be dealt with before talking to a lending partner.

2. Reach out to your network

Once you’re in a position to put your best foot forward to a new lender, start working your network of contacts. Ask them if they have connections with banks and other lenders that may want to do business with you. Discuss this with your accountant, lawyer, insurance broker or anyone else you think can refer you. 

But sometimes conventional banks won’t touch less-than-stellar businesses. If your business is hurting and out of financial covenant, you’re going to have to reach beyond conventional banks and approach non-traditional funders such as invoice factoring partners and asset-based lenders.

3. Don’t overlook your curb appeal

Whomever you approach, preparation is key when looking for a new funding partner. Not having an up-to-date financial statement is a red flag for lenders that can easily be avoided.

Professional lenders will check into your background and it’s wishful thinking to believe that they won’t find shortcomings — or worse, skeletons. And in this era of pervasive social media, examine your online presence, including your personal one, for anything that may cast you in an unflattering light. Any content that shows you behaving irresponsibly could affect your credit rating and, ultimately, your next banking or lending relationship.

Want to learn how to become lender friendly? Get our Lender Friendly Guide here.

4. Stay current with market trends

If your business is shipshape, keep an eye out for changes in the economic climate that may sideswipe you, as the banks tend not to view individual businesses in isolation. Stay current with business reports, as banks will often express concern about certain sectors in the media. 

If the banks announce that they are reducing their exposure in your industry, then it’s time to get proactive. Begin making contingency and continuity plans in the event that your current funding becomes unavailable or limited.

Ready for help? Access the working capital you need with Liquid Capital’s Alternative Funding Solutions.

At Liquid Capital, we understand what it takes for small, medium, and emerging mid-market businesses to succeed – because we’re business people ourselves. Our company is built on a network of locally owned and operated Principal Offices, so whenever you’re talking to Liquid Capital, you’re talking directly to your funding source and a fellow business person.

Titanic ship in a graphic form with a full moon.

4 cash flow crisis management tips to avoid economic icebergs

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Avoid becoming the next Titanic-sized failure and gain control of your business finances with these cash flow crisis management tips.

cash flow crisis management

When the Titanic sank in April 1912, there were a variety of factors that caused one of the worst maritime disasters in history. Experts agree that it was a combination of human error and natural forces that led to the historical sinking. The ship was going too fast, the crew dismissed a critical iceberg warning (and then made a fatal wrong turn), key costs were cut that sacrificed safety and there was a lack of equipment including binoculars and lifeboats.

If you’re running a company during the recent pandemic, there are some important lessons to be learned from the history of the Titanic. The financial impact of economic downturns can be significant when sales start slowing down, contracts are delayed, supply chains are disrupted, customers can be lost and, ultimately, cash flow is affected.

To survive, many businesses will need to leverage cash flow crisis management strategies. Though you may not always be able to avoid the ‘icebergs’ ahead, you can plan and respond to changing market conditions proactively to minimize the impact on your business — and avoid disaster. 

Here are four cash flow crisis management tips that can help you minimize the impact of economic downturns on your business:

1. Update your cash flow forecasts

“Cash is king.” Considering that the cash cycle for many businesses is 90 days, it is essential to have a good understanding of your sales cycle in terms of lead times, purchase of raw materials and production of goods and services. Sales forecasting helps business owners understand where cash is going (and coming) from. It can also help you to establish a strong slush fund in case of slow periods of growth.

Thinking about the future of your business is critical to success. However, as the business grows, it can become harder to get additional financing due to the debt that the business has to take on. Evaluating your burn rate and runway, your marketing programs and expenses can help you make necessary adjustments to your cash flow forecasts.

2. Follow up on outstanding accounts receivable

In periods of economic downturn, it is important to get on top of your accounts receivable and make sure that you are getting paid on time. By carefully auditing your accounts receivable, you can achieve better financial flexibility to avoid economic icebergs in the waters.

Once you have a firm understanding of what accounts are outstanding, it’s time to follow up with those accounts and have them settle their invoices. It may also be worth considering and balancing the risks and rewards of adjusting your terms of payment.

Want to learn more about savvy bookkeeping tips for small businesses? Click here.

3. Review and adjust expenses

To achieve greater business resilience, it’s important to understand all of the liabilities for your business and to have a plan to reduce them. Evaluating what your fixed and variable costs are is a good way to start cutting costs.

Looking for areas of flexibility on your payroll, cutting redundant line items and considering time management strategies or tools are just a few ways that you can adjust your expenses and increase profitability.  

 

cash flow crisis management

4. Consider alternative financing options

Keep an eye on future planning and strategizing. As your business grows quickly or financial circumstances change, you can run into challenges getting additional financing through traditional funding options. 

Leveraging the power of alternative financing options such as Invoice Factoring, Asset-based Lending or PO Financing could be the life preserver your business needs. Alternative funding can also help to increase flexibility and long-term success while complementing your current traditional funding arrangements.

At Liquid Capital, we understand what it takes for small, medium, and emerging mid-market businesses to succeed – because we’re business people ourselves. Our company is built on a network of locally owned and operated Principal Offices, so whenever you’re talking to Liquid Capital, you’re talking directly to your funding source and a fellow business person.

cut business expenses with advice from Liquid Capital

Cut business expenses & improve profitability — Get these 6 tips!

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Be strategic when setting out to cut business expenses and you can fuel business continuity.

Cut business expenses

A penny saved is a penny earned…it’s a saying that’s all too familiar to most entrepreneurs. (After all, all those pennies can add up to some big dollar amounts.) It’s also an extremely useful piece of advice when managing your cash flow and trying to outlast or prepare for an economic downturn. 

Knowing what costs and when to cut is a balancing act that, if not properly executed, can put your business in jeopardy. However, when done correctly, it could help set you up for business success.

Goodbye emotions, hello strategy. Cut business expenses with clarity.

When making budget cuts —  big or small — be careful not to act on emotion or jump too quickly. Instead, take a strategic and analytical approach to deciding which line items can be adjusted or deleted completely.

So dust off your calculator, sharpen your pencils and pull out your company’s financials. Here are six areas that you should look at when starting to cut business expenses.

1. Cash flow: future and present

Creating a plan for where you think your business will go is crucial to future success. It helps you to understand where the business is going so you can future-proof it against economic uncertainties. But you can’t know where you’re going if you don’t know where you are starting from now. So the first step is to calculate your current cash flow and identify areas of improvement.

Start with part 1 of our cash conversion cycle blog series.

2. Audit both variable and fixed expenses

Once you understand how cash is flowing through your company, you can look at adjusting the speed at which it leaves your coffers. 

You may be surprised to find that expenses once considered fixed, are now variable, and can be reduced or cut. For instance, with the recent shift many companies have made to remote work, you may find that you can downsize or make a transition to a partial or fully remote workspace. 

When looking at cutting your variable expenses, think outside of the box (even the smallest line items can add up). Office supplies that you regularly ordered may no longer be needed when your workforce is at home. Speak with vendors to take advantage of discounts and adjust your delivery schedules where applicable. Improving relationships with suppliers combined with better inventory and supply chain management can reduce expenses.

3. Industry benchmarks

Measure your performance against industry standards, which will help you better understand how your business is doing in comparison to the averages. Once you know how you stack up, you can take action to separate your business from the competition and increase profits. This will also help you create target goals for the next quarter or year. Make sure to share those with the entire team, so they know what they need to collectively achieve.

Cut business expenses & improve profitability

4. Implement time management strategies and tools

Time is money, so make sure you and your employees are making the most of the workday. Using apps like Focus Booster or Rescue Time can keep your team on task and focused on results. It’s also important to set expectations within your organization for how long certain tasks should take so everyone is clear on how their time should be spent. 

5. New technology investments

Constant investments in new technology can yield long-term improvements along with more efficiencies across the business — and reduce costs over time. Focus on maximizing ROI when building your tech stack. 

Is that new project management software going to speed up your team’s workflow and will they use it? Would better accounting software spot costly errors and pay for itself? Would AI improve your inventory management, or should you invest in other areas with a more immediate return? Carefully select tech investments based on your business goals — and watch out for tech trends that are just a flash in the pan. When you need to cut business expenses, don’t be the guinea pig.

6.  Employee incentives to cut business expenses

Creating loyalty amongst your staff and offering creative ways to reduce waste can go a long way. Listening to your employees can give you further insight into areas that could be cut or reduced. It may even spark some creative solutions that you wouldn’t have necessarily thought of alone. Set up a brainstorming session or survey as a starting point, and you may even want to delegate a team to find efficiencies and cost savings. By rewarding them for their efforts, everyone wins!

About Liquid Capital

At Liquid Capital, we understand what it takes for small, medium, and emerging mid-market businesses to succeed – because we’re business people ourselves. Our company is built on a network of locally owned and operated Principal Offices, so whenever you’re talking to Liquid Capital you’re talking directly to your funding source and a fellow business person.

 

Ready to cut business expenses today? Here are 5 more practical tips to spend money wisely. 

Bankers wear capes

Bankers wear capes, too! How funding superheroes work together

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Alternative and traditional funding solutions unite to make the perfect financing team — working together to help clients at the bank and beyond!

Want to provide the ultimate level of customer service to your customers and potentials? It’s time to dust off your cape and join forces — Avengers style. 

The Avengers all had similar goals, but very different approaches, to saving the day. Yet, when they united for a common goal (like preventing a supervillain from world domination), they were unstoppable. 

The same goes for banks and alternative funding partners. Together, these forces are able to provide powerful funding solutions for customers of all types.

If you are a banker who specializes in helping businesses secure financing, then you know the incredible importance of creating and maintaining strong customer relationships. However, your meticulously cultivated relationship could be in jeopardy if your customer doesn’t qualify for a traditional loan. By working with an alternative funding partner, you can stop saying no and start saying yes!

Time to save the day

When a customer (or potential customer) comes to you for help, reassure them that you’ll do everything in your power to accommodate their needs. They came to you looking for a solution to their problem and although your bank may not be able to help, you can always offer them alternative lending options, working with a partner who understands the role you each play.

Keep villains at bay

If you aren’t familiar with all the options available to your customer, you leave them vulnerable to potential evil-doers. Not all ‘lenders’ are created equal. There are some who might entice business owners with promises of low rates and false credibility — but your client may not realize there are caveats including contractual constraints and hidden costs. 

Your reputation is on the line, so it’s crucial to feel confident with the referral partners your work alongside. Get to know their solutions and processes so that you can develop a high level of trust in advance.

Want an easy resource to explain invoice factoring to your client? Download this eBook and feel free to share. Invoice Factoring Guide.

Put competition aside for the greater good

It’s easy to think that bankers and alternative lenders are competitors (after all, both provide funding to businesses in need). However, as with superheroes, both want the best for their clients — and to ultimately satisfy their needs to grow their business. 

As a banker, having a trusted preferred alternative lending partner can greatly alleviate the stresses of not being able to traditionally accommodate a client. Often, clients don’t know which solutions best suit their business, so they’ll trust you to guide them. By leaning on the expertise of a lending partner who can, in turn, give you accurate advice quickly, it can help to secure prospects and retain clients.

Outline a bridging program – Avengers style

Every superhero has their strengths and weaknesses, but when they band together, they become an unstoppable force. Creating a program that bridges the gap can also help you to gain higher market shares and enhance your bank’s overall image. 

In the case that a prospect is desirable, but their financial status or length of time in business disqualifies them for traditional lending, creating a bridging program can go a long way to securing them as a future customer. 

Your alternative funding partner can also assist the bank in picking up the deposits and some of the ancillary services to start working with the client. As they become qualified for bank financing, they could transition into traditional commercial lending. 

In the instance of a current customer, they might be maximized on their line of credit. Alternative lenders can step in to fill the gap for as long as the client needs it. The lender can extract themselves when you say they can now be accommodated with traditional lending.

Alternative and traditional funding solutions unite

Teaming up with those who have your client’s interest at heart, provides you with more resources to save the day.

Depending on the industry, or the economic landscape, there may be a slower ramp-up to when a client is ready for traditional banking. But now, not only have you provided your clients with reassurance and a trusted ready solution for the present, but you have also created a roadmap for their future business growth, getting them where they need to be for traditional banking.

Do you have a client that hasn’t met all the criteria for lending? Send them this quick guide so they know what steps to take next.

Now if that’s not a hero, who knows what is?

With the Liquid Capital Bank Alliance Program, we help banks grow their market share and strengthen client relationships. Learn more about how this exclusive program can work for you and your customers here.

About Liquid Capital

At Liquid Capital, we understand what it takes for small, medium, and emerging mid-market businesses to succeed – because we’re business people ourselves. Our company is built on a network of locally owned and operated Principal Offices, so whenever you’re talking to Liquid Capital you’re talking directly to your funding source and a fellow business person.

Business innovation

How to foster a culture of innovation in your company

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When the unexpected hits, fostering a culture of innovation within your small business can yield big results.

Culture of innovation

As this year’s world events began to unfold, many industries were hit hard — especially those who supply machinery to the aerospace and oil and gas industries. Those who worked to foster a culture of innovation have been able to forge ahead and keep their working capital flowing. 

Before the global pandemic even made its way to Canada, Machinery Experts Inc., a New Brunswick-based heavy equipment manufacturer, was already feeling the pinch from a protracted downturn in the oil and gas sector. Then COVID-19 hit, grounding air travel and drying up much of the company’s business from steel fabrication shops across Atlantic Canada. It also forced them to rethink how their sales team reached customers.

Like fellow business owners such as Bijan Bolouri of b.cycle, they had to quickly pivot and rethink their business model in order to survive the sudden downturn in sales. Fortunately, Chris Landry, president of Machinery Experts, knew that the key to surviving was through innovation. However, a misstep in strategy that put them in hot water meant they’d have to make another quick pivot and get back on the right track.

Here are three lessons for cultivating innovation, which Landry learned through experience during these unprecedented times. 

Missed the first 5 lessons on business innovation? Click here to catch up on part one.

 

Lesson 1: Turn lemons into lemonade

When life hands you a bag of lemons, you can turn them into something sweet — if you have the right frame of mind.

According to a recent study, the most resilient business leaders are also the most innovative, with 22% exhibiting higher innovation than their peers. They also reported having 19% higher cognitive flexibility and 18% higher team creativity. These skills are key drivers of success and are critical for overcoming the unexpected (and expected) obstacles that will come your way.  

For Landry and Machinery Experts, this has been a core strength of their business, even before the current downturn. Speaking about the repair business in a Natural Resources Magazine interview, “the bust times almost strengthen our business. Mining companies aren’t buying new assets, they are repairing current assets.” For the company, they knew that their services were needed even more when the economy turned downward, and that positioned them to prepare for future slumps.

Lesson 2: Own your mistakes

Creativity may not always translate to the market in the way it was intended — and when that happens, resilient leaders are able to bounce back quickly. 

For Landry, that creativity took the form of a billboard for Machinery Experts Inc., put up near a local beach to channel the fun, summery vibes they thought would appeal to passersbys. In reality, it was poorly received by many locals and Landry soon found himself inundated with calls for it to be removed. Realizing that his company’s billboard was not hitting the mark he had intended, Landry quickly jumped into action. The billboard was removed and Landry publicly apologized.  

Want to become a more resilient leader? Get these top tips.

 

Lesson 3: Respond to customers’ changing needs

Finding new ways to service the needs of your customers is a hallmark of a company with a culture of innovation — and that starts at the top. Resilient business owners are able to find new ways to use existing products and processes and are better at identifying areas of opportunity. In the case of Machinery Experts Inc., they were able to overcome setbacks by finding new areas to expand their business.

In the economic downturn, many steel fabrication plants were hesitant to purchase new machines, which can cost upwards of $500,000. Landry decided that a shift in the company’s focus from selling new machinery to providing long-term maintenance contracts and offering more used machinery (which costs between 30% and 50% less than new equipment) was what customers now needed.

“This is a revenue stream for us and it helps our customers because now they don’t have to deal with costly breakdowns,” the business leader explained.

 

Lesson 4: Enable your Sales team for the digital era

Machinery Experts’ successful pivot in response to changing customer demands means they are still operating in the black and are optimistic for the future. In recent months, the company’s sales of used equipment (which typically accounts for 20% of its revenue) doubled. They are also realizing gains from the newly launched maintenance services.

This wouldn’t have been possible without a quick pivot in the way their sales team is selling. Not only have the products and services adapted, but how they’re meeting with customers has, too. 

Leveraging the power of digital communication tools, such as Zoom, allowed salespeople to conduct meetings in a new way and let them showcase the machinery for sale. It also provided unexpected savings for their operating costs, as travel expenses were trimmed completely. 

“We can’t be the road warriors because you can’t cross the border, but that’s been a good thing in a way because we have the contacts,” Landry explains. Cold calling past customers has also provided a large boost to their sales slump. 

 

Even with these changes, it’s important to keep a realistic forecast. As Landry explains, “for the next couple of months, I just want to break even.” In the event of any unexpected market fluctuations, a conservative plan can keep your business moving forward.

 

Leadership first

This wouldn’t have been possible without a culture of innovation within the company, starting with its leader. Employees will embrace new ideas and ventures when leadership creates a space where innovation is encouraged.

You never know when the unexpected will happen, so fostering a culture of innovation within your business will help you come out on the other side.

Help me innovative with better cash flow

Experiencing a sudden influx of orders can be overwhelming even during the best of times. It’s important that you take preventive measures against experiencing a shortage of working capital by evaluating your cash flow and preparing for different financial scenarios. 

Even if you are incredibly diligent with maintaining your cash flow, there will still be times when you need extra working capital. Leveraging the power of alternative funding solutions can give you an advantage over the competition. 

 

To learn more about cash flow and smart cash for tactics read our 4 part cash conversion series:

Read Part 1: How to determine your company’s “cash conversion cycle”

Cash conversion cycle

Read Part 2: 7 proven cash flow tactics every CFO needs to know

 

Cash flow tactics for CFO

Read Part 3: Learn how to leverage your assets to grow your working capital

Grow your working capital

Read Part 4: Learn how to keep suppliers happy and cash in your pocket

 

About Liquid Capital

At Liquid Capital, we understand what it takes for small, medium, and emerging mid-market businesses to succeed – because we’re business people ourselves. Our company is built on a network of locally owned and operated Principal Offices, so whenever you’re talking to Liquid Capital you’re talking directly to your funding source and a fellow business person.

A close up view of a person in a professional suit shaking hands with another individual in a warehouse or industrial setting. Large cardboard boxes are stacked on pallets in the background, representing a successful purchase order financing agreement for a distribution or manufacturing business.

PO Financing can ensure your suppliers deliver — and improve your cash flow!

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Part 4 in the Cash Cycle series: Get the inventory you need faster with PO Financing.

For business owners, nothing quite beats the thrill of securing a new — and big — order. Ring that sales bell! But your excitement can extinguish the moment your realize there isn’t enough supplies or inventory on hand to deliver (even if you’re ready to start production.) You may jump to place a rush order with your supplier, but what if they need you to pay in advance or at the point of shipment?

Many companies don’t have the working capital to pay up front. And some can’t get a letter of credit so they can start the order. Will your supplier ship your goods? 

If you’re getting more orders than your available working capital can support, then PO Financing could help you cover the cost of product in transit.

How PO Financing works

PO-Financing

Leverage this powerful short-term financing tool designed to help your business grow. Ready to learn about the top three benefits of PO Financing? Keep reading!

PO Financing benefit 1: Increase your available working capital

Purchase Order Financing (PO Financing) helps you close the gap where suppliers are not providing adequate – or any – terms. By extending the number of days you have to pay your accounts payable, you can keep cash in the company and effectively increase your working capital. This financing option will also improve your cash flow, and your cash conversion cycle (CCC), which can help you meet supplier terms.

PO Financing benefit 2: Keep cash flowing through your business

In normal circumstances, you might have to wait 30, 60 or 90 days to collect on your sales (DSO = 30, 60 or 90). But a supplier may demand that you pay immediately before they will release your shipment (DPO = 0). If you don’t have significant working capital on hand, this leaves a serious gap. (More on these figures in a bit.)

As you’re stuck waiting to collect on your invoices, you’re still managing the ongoing costs of running your business and your shipment might not be released. Unfortunately, you’ll never be able to meet supplier terms without finding an alternative solution.

PO Financing benefit 3: Combine with invoice factoring for even more cash flow flexibility

PO Financing can extend your cash cycle and help get your product shipped. When you receive a PO from your customer, you place that with your supplier. As your financing partner, Liquid Capital would then provide your supplier with a letter of credit and they would release the shipment. Your customer invoice is then generated.

With PO Financing, businesses often use invoice factoring to obtain faster payment on their customer invoices once they are generated, so that they can take advantage of both solutions at once.

Example Scenario: Financing the cost of the product 

PO-Financing-example

The Gregory twins have been running their online retail venture the past couple years, selling car and truck accessories to the enthusiastic custom car community. Their suppliers are located across North America and overseas, so shipping is a big concern for the duo. Their business is growing, but their cash flow is still struggling. It’s tough to get supplier payments, orders and payments to align.

Currently, their main overseas supplier requires payment at the point of shipment for a large order ready to leave. Once the parts are on the boat, they’re considered sold to the Gregory twins – and time begins ticking – but the duo are cash-strapped and can’t pay the entire invoice. They’re in dire need to get the parts in their customers’ hands, as customer invoices usually take at least 35 days to be paid.

Fortunately, they have major customer orders with supporting POs, and Liquid Capital assists by supplying a letter of credit to the supplier. Liquid Capital finances the Gregory twins’ product costs until the order is delivered to the customer, which takes 12 days to arrive. They’ve secured not only payment but breathing room.

And by factoring their receivables, they’ll now only have to wait 5 days to see cash flow improve from their customer invoices.

 

CCC BEFORE PO Financing CCC AFTER PO Financing
CCC = DIO – DPO + DSO CCC = DIO – DPO + DSO
CCC = 60 – 0 + 35 CCC = 60 – 12 + 5
CCC = 95 days CCC = 53 days

Improved cash cycle by 42 days

    (Get the full cash cycle formula and descriptions here.)

What is the end result?

With PO financing alone, the Gregory brothers shorten their cash cycle by 12 days. That means they will convert inventory into liquid cash almost two weeks faster.

If they also take advantage of factoring their customer invoices, they could shorten by 30 more days, so their cash cycle is dramatically shortened. That’s a big difference from the three-month timeframe without financial support.

 

Get more information on the cash cycle, how to calculate it and strategic tactics for your company:

 

Part 1: How to Determine Your Company’s “Cash Conversion Cycle”

Cash conversion cycle

Part 2: 7 proven cash flow tactics every CFO needs to know

Cash flow tactics for CFO

Part 3: Leverage your assets to grow your working capital

Grow your working capital

About Liquid Capital

At Liquid Capital, we understand what it takes for small, medium, and emerging mid-market businesses to succeed – because we’re business people ourselves. Our company is built on a network of locally owned and operated Principal Offices, so whenever you’re talking to Liquid Capital you’re talking directly to your funding source and a fellow business person.

Grow your working capital

Unleash the powerful value of your assets to grow your working capital

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Part 3 in the Cash Cycle series: Don’t sacrifice your goals. Grow your working capital and regain control of your cash flow with asset-based lending.

Grow your working capital

Now more than ever, businesses are realizing the impact their cash flow has on their market resilience and longevity. According to one study, 82% of business failures are due to cash flow problems.. 

If your company is spending more money than it’s currently bringing in, you likely have a cash flow problem. This is a common issue for the majority of businesses and can signal that immediate changes are needed.

Asset-based lending to the rescue!

There can be many reasons why a business finds themselves experiencing cash flow problems and not all of them are negative. Unexpected growth opportunities are one such instance that you may find the need for extra working capital. The orders are coming in but you need cash to purchase inventory and supplies. 

Turning to traditional funding options, like banks, is not always possible. You may have maxed out your current borrowing capacity or, depending on your situation, it could be difficult to secure funding from traditional sources, as the loan criteria for banks can be more rigid.

On the other hand, with options such as asset-based lending, companies that have well-established financial reporting systems can unlock working capital to keep their business thriving.

Need a quick refresher on the CCC and how to calculate it? Keep reading to review the basics of your CCC (or read more about it in part 1 of this series). Ready to learn about ABL? Skip ahead for the top 3 benefits of this powerful alternative lending solution.

Quick Recap: What is the cash cycle?

Cash conversion cycle

The cash conversion cycle (CCC) tells you how many days it takes for your company to turn your inventory purchases into cash – a strong indicator of your company’s cash flow. Your CCC also helps lenders and other financial providers assess your potential risk level.

Through a fairly simple formula, you can calculate your own company’s cash cycle. The CCC is equal to the number of days it takes to sell your inventory, plus the number of days you need to collect on your sales, minus the days it takes you to pay your vendors.

cash conversion cycle formula

DIO Days Inventory Outstanding The average number of days it takes your company to turn inventory into sales. A lower number is better.
DPO Days Payable Outstanding The number of days it takes you to pay your accounts payable. The higher this number, the longer you can hold onto cash. A longer DPO (higher number) is better.
DSO Days Sales Outstanding  The number of days you’ll need to collect on sales of that inventory after the sale has been made. A lower number is better.

 

 

Want to learn more about smart cash flow strategies? Check out our Ultimate Cash Cycle Guide

ABL Advantage 1: Option-rich financing alternative

Asset-based lending allows you to leverage your inventory, equipment, real estate and accounts receivable to secure funding. For larger companies that have strong credit ratings and valuable assets, ABL can help you grow your working capital faster than many other funding products. How? It’s based on a percentage of your assets — so with more assets comes more opportunity. ABL could even offer funding as high as $10 million.

ABL Advantage 2: Discrete and flexible

ABL is also cost-effective, very flexible and discrete – something that most large companies value. You don’t have to change the invoicing process with your customers, and you can almost immediately access a significant amount of working capital.

ABL Advantage 3: Turn inventory into profit quicker

How does this impact the cash cycle? By securing ABL funding, a company will effectively reduce their DSO (Days Sales Outstanding) and reduce the number of days it takes to turn their inventory into cash. The company no longer has to wait the full time to collect on their sales, since the ABL delivers that capital much faster.

Example Scenario: How ABL can work for companies in real life

Using ABL

Clarence is the CFO of a tool manufacturing enterprise that has a large operating facility including a warehouse, office building and manufacturing plant. He prides himself on their impeccable financial reporting and averages 60 days for their accounts payable, and 90 days for collections.

The Sales team is working on a huge deal to sell existing inventory in their warehouse and expects to close that within 45 days. Another big deal is on the horizon that will require the production to ramp up, but cash flow is tight and Clarence needs to find capital to buy all the additional supplies that will be needed.

So he works with Liquid Capital to leverage their manufacturing equipment along with their existing receivables to secure a financing agreement. Liquid Capital approves the deal and advances them the required $2 million in funding 25 days later, taking over their existing receivables. The new deal goes through and Clarence approves the purchase of the required supplies.

CCC BEFORE ABL FUNDING CCC AFTER ABL FUNDING
CCC = DIO – DPO + DSO CCC = DIO – DPO + DSO
CCC = 45 – 60 + 90 CCC = 45 – 60 + 25
CCC = 75 days CCC = 10 days

Improved CCC by 65 days

What is the end results?

Using Asset-Based Lending, Clarence’s cash flow cycle has dramatically shifted, from 75 days to just 10 days. By freeing up resources, he’s now certain their new deal can go through.

In this example, Clarence was able to access such significant capital by leveraging the company assets in combination with his accounts receivable. For companies in similar situations, it’s worthwhile learning about your options and comparing them against other financing alternatives. By making the most of your options, you could access up to $10 million from Asset-Based Lending with Liquid Capital.

Up Next:

Read Part 1: How to determine your company’s «cash conversion cycle»

Cash conversion cycle

Read Part 2: 7 proven cash flow tactics every CFO needs to know

Cash flow tactics for CFO

Read Part 4: Learn how to keep suppliers happy and cash in your pocket

About Liquid Capital

At Liquid Capital, we understand what it takes for small, medium, and emerging mid-market businesses to succeed – because we’re business people ourselves. Our company is built on a network of locally owned and operated Principal Offices, so whenever you’re talking to Liquid Capital you’re talking directly to your funding source and a fellow business person.