Cash flow is very different from sales, orders, an earned revenue.  It can come from many parties: customers, banks, vendors, investors; and can take many forms: debt, equity, etc.  Cash in any industry is king.  Follow these tips on how to take control over your cash flow and "wear the crown."

1. Use your vendors as a bank by extending payment terms, using credit cards and tying vendor payments to customer payments upon acceptance.  For large purchasers, get Letters of Credit which are less costly than borrowing and use leasing for your internal capital expenditures by matching your payment plan with accounting amortization and estimated useful life.
2. Asset-based loans allow companies to leverage all assets (receivables, inventory, intangibles) to squeeze collateral to create credit lines.  Factoring uses accounts receivable to provide speedy cash flow for growing companies.
3. Many Executives and entrepreneurs focus too much on the profit and loss and don't manage the balance sheet.  Find other assets to leverage.  Pay attention to ratios such as debt to equity and current ratio.
4. Whispers can create noise in collections.  Stay tuned in to customer service and quality issues (they can be cash killers).  High finished goods inventory and delayed customer shipments can stretch cash flow.  Consider invoicing clients and requiring payments for shipments on hold.
5. Create Proactive collections process paying close attention to the terms and conditions of sales and payments.  Timely collection calls and prompt issue resolution can keep the cash flowing.  Invoice customers electronically by leveraging technology to speed up the invoicing process with electronic signature for proof of delivery.

Take for example, Amtech Software, and award-winning, 35-year old technology company specializing in enterprise resource planning (ERP) systems for the packaging and forest products industries.  When we decided to re-architect one of our products to the cloud we knew it was going to be a multi-year project with costs in the millions before we would begin to generate cash flow.

We found our lender to be very supportive and offered long-term financing which gave us the confidence to begin the design phase.  Once we moved from design to development (85 percent of the costs in this phase) we set out to find a hungry development company that would help us align our payments with anticipated cash receipts.  We were very firm in our requirement that any vendor must have the financial strength and staying power to support their cost by delaying our disbursements to them.  We found a vendor who was enthusiastic to initiate the project and meet our needs by extending payments over 30 months in total and six months in total and six months past completion date.  

Between our bank and vendor our product development costs have not had any negative impact on our revenue and operations.  In fact, they have paved the way to what we hope will be unprecedented growth.

As a 35-year technology industry veteran, Cosmo DeNicola has founded and led several national companies (both private and public) to market-leading positions.  Philadelphia-based Cosmo DeNicola Companies is a privately held holding company with a diverse portfolio of businesses ranging from health care, technology, professional sports and entertainment.