Five proven strategies for maximizing your cash flow

We asked the leaders of some of Canada’s fastest growing companies how they keep the money tap open. Here’s what they said

Joe Thacker, Sarah English, Sajan Choksi, Kevin Higgins, Kevin Danylchuk

Clockwise from top left: Joe Thacker, Sarah English, Sajan Choksi, Kevin Higgins, Kevin Danylchuk. (Photoillustration by Gerrit de Jonge)

Small business owners learn (sometimes the hard way) that cash flow can make or break your business. We asked some masters of cash flow from the PROFIT 500—Canada’s fastest-growing businesses—how they keep the money running:

Think long term

“We believe in leveraging cash flow to drive additional growth, so we recycle a very large percentage of our cash back into the business. Though it initially slowed our growth down, by having low debt we never put the company at financial risk and built a strong foundation we can now leverage.”

Joe Thacker, CEO, Fusion Retail Analytics (No. 249 on the PROFIT 500)

Build a war chest

“Since Day 1, we’ve put aside three months’ worth of operating expenses in a high-interest account to use in the event we have cash-flow issues. We call this our ‘cash cushion.’ Once or twice a year we will dip into it to cover bills, and then we’ll replenish it when cash flow is back on track.”

Sarah English, Managing director, Usability Matters (No. 317 on the PROFIT 500)

Play the dates

“We try to get at least 30-day terms from our suppliers and use our credit cards to pay those invoices on the 27th day. We pay the credit cards 30 days later, which effectively ensures that our cash outflow is at least 55 days. With our cash inflow at 30 days, we’re always in a positive cash position. We also rack up a lot of travel points, which is an added bonus!”

Sajan Choksi, CEO, Innovative Vision (No. 241 on the PROFIT 500)

Don’t wait

“We have a line of credit at the bank, but we rarely use it. We’ve found it helpful to obtain credit when we’ve qualified for it, even when we don’t anticipate needing it. Asking for credit when you need it exposes you to the risk that it could be denied, or insufficient, based on your company’s current position.”

Kevin Higgins, CEO, Fusion Learning (No. 338 on the PROFIT 500)

Ask your bank to get creative

“Since our company isn’t one with much capital—our ‘assets’ are our employees and contracts—we have been able to finance new programs under an accounts receivable margining system, in which the bank will loan us short-term funds based on our current contracts and receivables. This does require monthly reporting, but it allows our cash availability to grow with our company.”

Kevin Danylchuk, President, Vanguard Pharma (No. 347 on the PROFIT 500)