Editor’s Note: On the 7th of February, we held a Startup Financials Workshop to get the McGill Dobson Cup teams versed in the Finances 101 that they’ll have to know to move forward to the Finals. The presentation was lead by Rabih Atallah – Senior Manager, Commercial Banking, SME Market (National Bank), as well as Anthony Ferrara – Senior Manager and Market Lead, Life sciences and Health, Business Banking. (National Bank)
Have a detailed breakdown of your cash flow
- To evaluate your liquidity
- To maximize the use of your cash
- To calculate your burn rate
- To ensure your ability to meet short-term obligations
- To secure more financing
- To evaluate whether your projections are accurate.
Here are some tips on maximizing your cash flow:
- Delay the payment of your accounts payable.
- Use a credit card to pay your liabilities; you win a month delay to pay the balance and make points to be cashed in.
- Make sure to keep only the required inventory to support your clients, as inventory can become a liability.
- Structure your employees’ compensation with a mix of salary and short-term bonuses.
- Minimize your investment in R&D (focus on your core business) and find partners to provide add-on services for a variable fee.
- Consider leasing non-core materials vs. purchasing.
- Discuss with your financial institution the option to have access to short-term funds (i.e. revolving credit line).
- Improve the recoverability of your accounts receivable by giving discounts when a customer pays early.