Let’s manage the money flowing in and out of your business

After I talked about inventory a few weeks ago, more than a few of you reached out to let me know what you were doing with your inventory, so I think it’s worth it to follow up. And to talk more about inventory issues, we absolutely should step back and talk about cash flow.

Because cash flow is my favorite

In a nutshell, cash flow is a prediction for how the money moves in and out of your business. It can be about how much money is in your bank account right now, but it’s also about what will be in your bank account tomorrow, next week, next month or even next year.

Want to hear me talk more about how and why cash flow helps you? Check out my Podcast on YouTube!

Think of it this way. You have a bill to pay next week. Rent, let’s say. But you also have to order metals for an upcoming order for which you have not yet been paid. You need to place that metals order today. You also are expecting your consignment account to send you a check for an unknown amount of money in 3 days. And then that big order will be paid in a month.

How much money do you actually have to spend on metals?

Hint: it’s not “whatever my bank account balance shows right now”.

Thing is, this is exactly how a lot of us make decisions about how to spend on metals and stones. I know this is how I used to manage it.

Sure, you could spend extra on metals, and order more than you need “just in case”. But how will that impact your ability to pay rent? What about surprise expenses? If you have to put your materials on a credit card, will you remember to pay it off once you get paid for that larger order? How will you schedule these payments AND ensure that you have money on hand to pay for everything?

Managing your inventory means managing your cash flow

This is why shoring up your inventory system can impact your cash flow so much.

With so many of your expenses – rent, software, show fees, credit card fees – you have little room to be able to negotiate and you have to pay them regardless of whether or not you have sales coming in.

But with your materials, you have a lot more control. You don’t have to order extra, you can do some price comparisons, you can literally melt down existing metals and reshape them into new work without needing to buy new material if you have the equipment on hand.

You can think of unsold inventory as money that is sitting in your business. Money that is not liquid. Money that you can’t use until you sell or scrap it. Managing your materials purchases will help you improve your cash flow immensely.

Predicting the future waaaaay far out means taking into account a lot of uncertainties, but spending with some restraint means that we will have more confidence and assurance that we will still have money on hand next week and beyond.

Prefer to listen or watch to learn all about cash flow? Check out my YouTube Video that dives in even deeper!

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