| How To Effectively Manage Cash Flow Through Payroll Management

Posted in Cash Management, Employees, Payroll, Spa/Salon at 9:00 AM by Loftis Consulting

One of my clients who owns and runs a Chicago day spa was paying his employees every week. When the business had a slow week, he was struggling to make payroll. Does this sound like your situation? Employee costs are usually the largest expense for companies, no matter what their size. Here are four tips to better cash management.

  1. Establish a business line of credit before you need it. A line of credit will enable your business to weather short-term cash crunches due to temporary cash flow problems such as weekly fluctuations in business sales.

  2. Pay employees bi-weekly. Pay independent contractors only after you have received payment. By managing payroll this way you can reduce administrative costs and balance cash receipts with cash payments.

  3. Transition from paper checks to direct deposit. This not only clears up administrative tasks such as cutting and distributing checks but also cuts costs.

  4. Hire the right people the first time. If you are constantly refilling positions because you had to fire the person for non-performance or they quit something is wrong with your hiring process. The cost of training and rehiring can add up both in dollars and time. If you do it right the first time you will not only save money but also frustration.

  5. Hire the right people who can fill multiple roles. This works great for businesses that suffer from drastic changes in demand. For example, a day spa may be fully booked on the weekends but suffer from low demand on weekdays. To combat this, I would recommend you hire an employee who could fulfill multiple roles such as massage therapist and esthetician. Instead of having two idle employees you now have one that can service clients in multiple services if demand picks up.

By following these tips you can lower the administrative burden of payroll and save cash.  Visit our website to learn more about Loftis Consulting and its part-time CFO services.



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  1. […] here: How To Effectively Manage Cash Flow Through Payroll Management Posted in Cash Flow Tags: business, cash flow, cash-crunches, cash-flow, short, […]

    Pingback by How To Effectively Manage Cash Flow Through Payroll Management | Cash Flow — November 21, 2011 #

  2. I just signed up to your blogs rss feed. Will you post more on this subject?

    Comment by Andrew J. Gephart — November 28, 2011 #

  3. Yes, I plan to add additional articles on ways to manage cash flow.

    Comment by Loftis Consulting — December 2, 2011 #

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