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Financial Matters: Cash Flow, Credit Rating, Time Management

Three Critical Financial Matters: Cash Flow, Credit Rating, and Time Management

Financial Matters: Cash Flow, Credit Rating, Time ManagementBusiness owners may think of revenue as the only financial concern that matters to them. They’re wrong. Bringing in revenue and keeping the pipeline of potential customers full is important, but there are other things that are just as critical, such as a cash flow, credit rating, and even time management. Attention to these other matters can be the difference between whether you survive and grow or go under.

Cash flow

According to U.S. Bank study noted in an article by, 82% of business failures are the result of cash flow problems. Cash flow is the movement of money in and out of a company. A sale does not affect cash flow until payment is received. An expense does not impact cash flow until the account payable is paid. While some businesses are paid on the spot—when a sale is made or services are provided—others must send an invoice and wait to get paid. So, even though sales are good, if payments are slow, a cash crunch—insufficient funds on hand to pay bills—may be created.

Strategies to improve cash flow include actions addressing both sides of the cash flow equation: money in and money out.

 To increase money coming in:

  • Increase sales
  • Raise prices
  • Expand into new markets
  • Use new selling channels (e.g., add social media sales options)
  • Improve collection activities so outstanding invoices don’t become delinquent

Note: Don’t rely for the long term on government programs, such as PPP loans for help with cash flow; these programs are only temporary.

 To decrease money going out:

  • Review and cut expenses (e.g., cancel unused subscriptions; reduce or eliminate debt to reduce interest costs; look for tax-saving strategies).

Manage payments options. To be sure you’re paying vendors, contractors, and other payables on time, consider using:

  • A line of credit that can be tapped when and to the extent needed.
  • A payment solution such as Melio where you have the option of paying by a transfer from your bank or using your credit card. If you opt for the credit card method, you gain the float on the card and the ability to finance your payments until you receive revenue to pay off the credit card balance. And, depending on the card, you can earn miles or cash back. Either way, the vendor/contractor/etc. receives payment via a bank check from Melio or a bank transfer, whichever they prefer.

Other cash flow strategies

It’s essential to do cash flow forecasting for the short term and long term to help better manage your business’s money. There are cash flow forecasting tools for this purpose.

It’s also important to continually monitor cash flow—on a daily, weekly, or other regular basis. Use tools, such as QuickBooks or other accounting solutions, to view where you stand.

Business credit

Business owners are familiar with their personal credit score from FICO, which is used to help obtain a home mortgage or buy a personal car. But businesses have credit scores too, which are essential in:

  • Getting financing. If the business needs to obtain a loan (e.g., finance the purchase of a truck or other equipment), the business’s credit score determines whether a loan application is approved, and what interest rate will be charged. The better the credit rating, the lower the interest rate. Also, having a good business credit score may means that an owner won’t be required to personally guarantee the business loan.
  • Getting customers. B2B relationships may hinge on a company’s credit rating because businesses may check on your credit score—through D&B or Experian—in deciding whether you work with you. They want to be sure that you’re reliable, as indicated by your credit score. No permission is necessary to do this credit check and responsible companies will look at your standing (do their due diligence) before moving ahead.

Time management

“The true currency of life is time, not money, and we’ve all got a limited stock of that.”—Novelist Robert Harris.

So, using tools to help save time and effort are essential to business success. For example, Melio allows you to set up recurring payments (e.g., rent or other fixed expenses), so you don’t have to repeat the payment process every time.

Technology is great, but if there is a steep learning curve it may cut into time savings. Melio is easy to use; no learning curve is necessary.

Final thought

Businesses need to manage cash flow, maintain a good credit rating, and optimize time management, but don’t want to spend a lot of money doing so. To the extent you can reduce work hours of employees devoted to these financial aspects, you’ve created additional hours for other business matters. What’s more, the cost of using Melio is free if you do a bank transfer; it’s 2.9% if you pay by credit card. Either way, there’s no subscription or commitment; use it at your convenience. Because of this flexibility, Melio is an important tool for small business owners to consider.


Melio Payments LogoThis post was based on a webcast hosted by Brian Moran of Small Business Edge and me, sponsored by Melio. All opinions expressed in this post are Brian’s and mine and not those of Melio.