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Extra Features and Video Online FloristsReview.com R E A D O N L I N E 55 strain on smaller businesses that may not have the cash reserves to absorb delays in receipts," Beaver says. "For most companies, cash-fl ow forecasts are less than 75 percent accurate." One approach to anticipating likely variables is to look at historical performance. What percentage of receivables is usually collected during slower seasons? at fi gure can be applied to open receivables to help estimate the likely pace of receipts. FASTER RECEIPTS Historic data, of course, may provide a less-than-reliable foundation for future forecasts. Whatever the estimates for what lies ahead, businesses can obviate cash squeezes by accelerating accounts receivable and stretching accounts payable. For the former, experts advise running regular aging reports. How much do customers owe in increments of two weeks, 30 days and 60 days? Any growth in the numbers over time might indicate a steady deterioration of cash fl ow. Keeping in close touch with customers can also help accelerate receipts by providing opportunities to request timely payments and helping spot nascent issues that may grow into future roadblocks. "Maintain a good handle on what customers are doing," Anderson advises. "What are their future sales activities? Are they encountering problems that may aff ect operations?" Not all customers are of equal importance, and it's smart to concentrate eff orts on the most profi table. Account reviews can identify which customers should receive the most attention. "So much of the important information required to monitor cash fl ow is tied to a selling cycle which varies by customer," says Frank Cespedes, Ph.D., senior lecturer at Harvard Business School. "Some buyers say 'yes' or 'no' when you make a call; others require multiple iterations of proposals. Some buy what you have in inventory; others require customized items. ose things aff ect the time to receive cash and the cost to fulfi ll orders. Good account reviews unearth that information." As for the outward fl ow of cash, a tried-and-true tactic is delaying the payment of monies owed. "Good fi nancial management on the buy side has always stretched out payables," Cespedes notes. " is is particularly so in an infl ationary environment where businesses must pay a lot more attention to the payment cycle." Stretching payables can, of course, backfi re. For starters, it can mean the loss of the 5 percent or 10 percent discounts many companies off er customers who pay before their due dates. It can also result in higher prices for goods and services. "Extending too far makes you more of a risk," Beaver says. "And suppliers tend to give better prices to customers that are less risky." And there's also dependability of deliveries to consider: Ongoing supply- chain disruptions will cause vendors to favor deliveries to customers who pay on time or early. e cost of not having essential materials can be greater than the interest cost required to borrow money to bridge cash gaps. MITIGATING COSTS In an infl ationary environment, suppliers of goods and services tend to raise their prices. And higher rates of infl ation tend FORECASTING CASH FLOW Of all the steps retailers can take to mitigate the bottom-line eff ects of infl ation, the most important is better management of cash fl ow. Infl ation tends to accelerate the drain of money from company coff ers and throttle the fl ow that comes in. If left unaddressed, these battling trends can gut profi ts and threaten business survival. Experts advise looking at the coming months with an eye toward estimating what will happen to cash balances. "Proactively managing cash fl ow is critical right now," says Lisa Anderson, president of LMA Consulting Group in Claremont, Calif. is can be done by running periodic forecasts. "I recommend looking at your demand side and asking, 'What are we really going to need here?' And then looking at your supply side and asking, 'What will I have to make?' And then determining what the answers mean for cash fl ow. If it's going to be negative, you better borrow some money." Such analysis, of course, involves estimates of future revenues—a practice tainted by uncertainty. "Having a sales forecast is great, but that doesn't mean you will collect all the money you think you will," says Scott Beaver, senior product marketing manager at Oracle NetSuite. "And even if your sales forecast is 100 percent accurate, will the expected time frame be met?" What determines cash on hand is not sales but collections, and history shows that during infl ationary times customers start paying slower as a result of their own cash squeezes. Planning must refl ect the reality of cash-fl ow uncertainty. "Growing accounts receivable can put serious

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