By Chuck Slothower
Four Corners Business Journal
FARMINGTON Cash flow problems kill more businesses than lack of profit, a local business consultant told small business owners at a San Juan College workshop.
"You have to have liquidity. You need access to cash," said Christopher Hunter, Cornerstone Business Solutions owner. "Without cash, you're instantly dead."
Hunter spoke to a group that included an owner and manager of a repair business, an owner of an oil and gas engineering firm, accountants and other small business owners. The workshop was held March 28 at the college's Quality Center for Business.
Among Hunter's tips: don't be afraid to ask your overdue customers to pay up.
"The bottom line is slow payers cost you money," he said.
Hunter also suggested for businesses that keep inventory to "get rid of slow-moving items" by selling at cost or bundling and discounting long-held inventory.
"Look at dead wood in your inventory," he said. "We've all got it here and there."
Hunter noted the oil and gas industry has notoriously long lag times before payment.
"Sometimes we've got a big barrier about asking someone to pay," he said.
Small businesses should also establish a line of credit whether or not it's needed immediately.
"Sooner or later you may need it, and when you need it is not the time to get it," he said.
Hunter consults for small businesses in San Juan County. One accountant said she appreciated his help.
"We really value his business insight," said Annette Risley, a certified public accountant.
Payments often don't coincide with bills due, said Hunter.
"Cash flow management is basically about speeding up the inflows and slowing down the outflows," he said.
Hunter also recommended businesses create a cash flow forecast for a given time period. These should include receipts, payments, opening bank balance and closing bank balance.
Carmen Martinez, director of the Small Business Development Center, said forecasting is a necessary practice.
"Even if you've been in business for a while, you do need to forecast on at least an annual basis," she said.
Hunter said business people can't shy away from the details.
"The difference between a hobby and a business," he said, "is the business knows the numbers."