I have recently been declined a bank loan because of low cash flow. How can I increase cash flow in this era of credit cards and coupon discounting?
– John DelPizzo, Owner, Del’s, Pittsburgh, Penn.
A few suggestions:
Collect. Take advance deposits for catering orders and private parties.
Pay at the end of the window. Don’t pay bills late, but do pay just before the due date, especially if you are not offered a discount for paying early.
Audit. Especially in the bar, make sure all of your revenue is being collected and bartenders are not over-pouring. Use mystery shoppers or cameras to help.
Innovate. Add menu items that take advantage of byproducts. For example, Max Calicchio of Max’s ESCA in Staten Island, New York, added a tuna tartare appetizer composed of trim from his tuna steaks, and a beef bruschetta that comes from tenderloin trim that previously would have gone to family meal.
Communicate and negotiate. Let vendors know that cash flow is a pressing issue and ask them to help. They may be willing to work with you in exchange for an ongoing relationship by offering discounts for cash on delivery or an extended credit term. Examine your service contracts from past years and see if you have been getting what you pay for.
Keep inventory low. Given the option, choose smaller, more frequent deliveries.
Finally, use this bad news from the bank as a message to closely examine places to control costs while maintaining quality. Do you need to be sending an employee home earlier on certain shifts? Weigh your deliveries—are you being properly charged for meats, fish and produce? Are any ingredients spoiling in storage? Are cooks maximizing the use of products? Are you burning energy heating or cooling a restaurant when closed?