Cash Flow Management in Cedar Rapids, Iowa

A contractor in Marion called us about a line of credit. He was tight on cash, payroll was Friday, and he wanted help putting an application together for the bank.

Before we started we pulled his receivables. He was owed $41,000. Nineteen thousand of it was more than sixty days old, and one customer at $8,400 had been sitting since March. He did not need to borrow money. He needed to collect the money he had already earned. We spent an afternoon on the aging list instead of a week on a loan application, and he had $14,000 in by the end of the following week. His monthly bookkeeping had the whole picture in it. Nobody had looked at it that way.

Cash flow management is the week to week work of making sure the money you have earned actually arrives, and that what goes out is timed so you are never caught short.

Cash Flow Management from a Cedar Rapids Accounting Firm

Three different jobs get called cash flow, and this is the operational one.

Worth separating. Budgeting and forecasting is the annual plan and the seasonal set-aside. Financial analysis measures how many days your money takes to come back. Cash flow management is the ongoing practice: chasing what is owed, timing what goes out, and knowing what the next few weeks look like.

As a Cedar Rapids accounting firm working mostly with trades and service businesses, this is where we see the most avoidable damage. Profitable businesses borrow money they do not need, or turn down work, because nobody is watching the timing.

The Four Levers

Cash flow has only four moving parts. Everything else is detail.

• How fast you invoice. The clock does not start until the invoice goes out, and most delays start here.
• How fast you collect. Chasing is a process, not a personality trait.
• When you pay. Paying everything the day it arrives feels responsible and costs you flexibility.
• What you hold. A buffer that covers the gap, so a slow payer is an annoyance rather than a crisis.

Most owners only think about the fourth one, and usually by worrying about it rather than sizing it.

Invoicing Faster Than You Think You Do

Ask an owner how quickly they invoice and they will say straight away. The file usually disagrees.

Work finishes Thursday. The invoice goes out the following Tuesday because that is when there was time at a desk. The customer pays on their normal thirty day cycle from receipt. That five day delay just became five days of your money, on every job, all year.

Invoicing from the phone at the job site fixes most of it. Same day, before the truck leaves. For businesses doing many small jobs it is the single highest-return change available, and it costs nothing.

Collections Without Being the Bad Guy

Most owners hate chasing money, so they do it late, apologetically, and inconsistently.

It works better as a routine that runs regardless of mood. A polite reminder at day seven. A firmer one at day twenty-one with the invoice attached again. A phone call at thirty. Most late payment is not refusal, it is an invoice sitting in somebody's inbox, and the seven day nudge collects a surprising amount of it.

The other half is terms. If you have never stated payment terms, you do not have any. Net fifteen on the invoice, deposits on larger jobs, and progress billing on anything running more than a few weeks.

For bid work, progress billing matters most. See bookkeeping for contractors for how we set that up.

The Thirteen Week View

Far enough ahead to act, close enough to be accurate.

A twelve month forecast is for planning. For managing cash you want the next thirteen weeks: what is coming in and roughly when, what has to go out, and where it gets tight. Thirteen weeks is a quarter, which is long enough to see a problem while you can still do something about it.

The useful output is not a spreadsheet. It is a sentence. Week six is tight, so either the Henderson invoice gets collected or the equipment payment moves.

Cash Flow for Cedar Rapids Trades

The shape of the problem changes by who your customers are.

Residential work around Cedar Rapids, Marion and Robins usually collects fast. Homeowners pay on completion or within a couple of weeks. The cash risk there is seasonal rather than collection based.

Commercial and municipal work in Linn County is the opposite. The work is steady and the money is reliable, but it arrives sixty to ninety days out. Businesses that win a big commercial contract often hit their worst cash position two months later, because they are funding the work before any of it pays.

We work with businesses across the whole service area, out to Lisbon, Mt Vernon, Ely, Swisher, Springville, Bertram and Covington.

What We Do Each Month

The aging list, actually reviewed

Who owes what, how long it has been, and which three need a call this week. Not a report that gets filed, a short list with names on it.

The near-term view

What is coming in, what is going out, and where the pinch points are in the next thirteen weeks.

The one action

Usually a single thing. Chase these two. Move that payment a week. Ask for a deposit on the next big job.

Who This Fits, and Who It Does Not

It fits you if

You invoice customers rather than being paid at the point of sale, you have felt tight in a month you know was profitable, or you are moving into commercial work with longer terms.

It does not fit if

You are paid immediately by every customer, in which case your cash issue is seasonal and budgeting and forecasting is the better page. It also will not help if the underlying business is not profitable, because that is a pricing problem wearing a cash flow costume.

Why Cedar Rapids Owners Choose Us

We look before recommending borrowing

Plenty of cash problems are collection problems. Borrowing against money you are already owed is expensive and it treats a symptom.

The aging list gets read, not filed

Every accounting system produces one. Almost nobody looks at it. The value is entirely in somebody going through it monthly and saying which three to chase.

We keep the number in front of you

Cash gets managed when somebody is watching it weekly. That is most of the service.

What Cash Flow Management Costs

Part of the monthly work rather than a separate service.

Monthly bookkeeping starts at $350, set by transaction volume, how many accounts you carry and whether you run payroll. Receivables review and the near-term cash view are included. A one-off collections clean-up on a badly overdue ledger is quoted flat. Details are on the pricing page.

Getting Started

It starts with a free Books Health Check. Fifteen minutes, screen shared, your file open. We can usually tell you on that call how much you are owed and how much of it is overdue.

Call (319) 382-9017 or use the contact page. You get a real reply within one business day.

What Else We Handle

If timing is not the problem, these might be closer to it.

Questions Cedar Rapids Owners Ask