Cash Flow FAQ — Hillman Ventures Inc
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Q: What’s the fastest way to improve small-business cash flow?

A: Reduce the cash conversion cycle: speed up invoicing, shorten payment terms, offer small early-pay discounts (e.g., 2/10 Net 30), and tighten credit approvals. Defer non-critical spend, renegotiate vendor terms, clear slow-moving inventory, and monitor cash weekly for quick feedback.

Q: How do I forecast cash flow for the next 12 months?
A: Start with beginning cash, then project monthly inflows (sales, collections, other income) and outflows (COGS, payroll, rent, taxes, debt service, CAPEX). Build base/upside/downside scenarios, update actuals weekly or monthly, and use a rolling 13-week view for near-term control plus quarterly summaries.

Q: What is working capital and how much should my business maintain?
A: Working capital is current assets minus current liabilities. Maintain enough to cover operating volatility and growth—often 1–3 months of operating expenses, adjusted for your collections and inventory cycles. Improve by accelerating receivables, optimizing payables, and increasing inventory turns.

Q: How can I shorten my receivables cycle without hurting customer relationships?
A: Invoice immediately, set clear terms, automate reminders, and offer small early-pay incentives. Require deposits for large orders, set credit limits by risk, and escalate past-due follow-ups on a schedule. Keep communication friendly but firm; consistent processes reduce days-sales-outstanding.

Q: How do I spot early warning signs of cash flow trouble?
A: Watch for rising DSO, increasing overdrafts, delayed vendor payments, growing credit-card balances, and frequent short-term fixes. If payroll timing feels tight or inventory rises faster than sales, act—tighten terms, trim non-essential spend, and revise your forecasts.

Q: What’s the difference between cash flow and profit?
A: Profit measures performance (revenues minus expenses). Cash flow tracks actual money movement. You can be profitable but cash-poor if receivables and inventory consume cash—or cash-rich but unprofitable after asset sales or financing. Manage both earnings quality and cash conversion.

Q: Should I use a line of credit or invoice factoring to smooth cash flow?
A: A line of credit is flexible and often cheaper if you qualify; factoring advances cash against invoices but costs more. Compare total cost, contract terms, customer impact, and admin effort. Use short-term financing as a bridge while fixing underlying cash drivers.

Q: How often should I update my cash flow forecast?
A: Update weekly for near-term accuracy (13-week view) and monthly for 12-month planning. Reconcile forecast vs. actuals and adjust assumptions on collections, sales, and spend. Frequent iteration prevents surprises and improves decisions.

Q: Which payment terms improve cash flow without losing clients?
A: Favor Net 15–30, offer early-pay discounts (1–2%), require deposits or progress billing for long jobs, and accept multiple payment methods. For key accounts, trade discounts for volume or reliability to keep both cash and relationships healthy.

Q: What daily/weekly reports help me manage cash?
A: Daily bank balance and expected deposits; weekly 13-week cash forecast; A/R aging with collections plan; A/P aging with payment schedule; inventory turns; and forecast-vs-actual variance analysis. These make cash drivers visible and actionable.

Q: How can Portland/Oregon businesses manage seasonal cash swings?
A: Map seasonal peaks/troughs into your 13-week and 12-month forecasts. Lock vendor terms before peak spend, build a cushion (reserve or LOC), and match staffing/inventory to demand. Calendar Oregon tax obligations (e.g., CAT) to avoid timing surprises.

Q: Can Hillman Ventures help implement cash-flow controls and reporting?
A: Yes. We set up rolling forecasts, collections playbooks, payables calendars, and KPI dashboards, then coach your team on discipline and improvements. Many clients see faster collections, smoother pay cycles, and clearer decisions within the first quarter.