Chicago CMO Educates on Cash Flow Budgeting

Chief marketing officers juggle many responsibilities outside of marketing, one of which is cash flow budgeting. Using their expertise in financial management and budget allocation, fractional CMOs help ensure that businesses earn more than they spend and don’t spend more than what they’re capable of.

Cash flow budgeting is no walk in the park, especially for growing businesses that don’t have a dedicated finance team. However, you can always seek the help of a fractional CMO for professional services to help with the heavy lifting.

If you’re in a similar position, then this guide is for you! Keep reading for a fractional CMO’s cash flow budgeting tips in Chicago.

Chicago: What Is a Fractional CMO?

A fractional CMO, or chief marketing officer, is a part-time marketing professional who guides and oversees a company’s marketing efforts. They play an active role in planning, executing, and tracking marketing campaigns and everything that goes on in between.

A Chicago FCMO offers a wide variety of digital marketing services, which include but aren’t limited to:

• Marketing budget allocation
• Brand management
• Market research
• Competitor analysis
• Marketing compliance
• Data analytics
• Digital marketing channels (SEO, content marketing, email marketing, PPC, social media, and more)

One of the benefits of fractional CMOs in small businesses is that they’re more affordable than full-time CMOs. You don’t have to take into account full-time salaries, monthly benefits, health insurance, and other added costs. This gives you more flexibility to invest in more important competencies.

More questions on Chicago FCMOs? Jason’s here to help!

What Is Cash Flow Budgeting?

Cash flow budgeting involves looking at your current cash inflow and outflow over a specific period, such as weekly, monthly, or annually. It’s used to estimate future budgets and see if you have enough cash to maintain regular operations and pay liabilities.

Positive cash flows indicate that you’re gaining more money than you’re spending, giving you more flexibility in your budget to invest in other areas of the business. Meanwhile, negative cash flows indicate that you could be spending too much and not getting enough back. This limits your opportunities for expansion and keeps the business financially stable.

A fractional CMO for cash flow budgeting in Chicago might assess these when looking at your current financial situation: 

• Operating Cash Flow: Operating cash flow refers to money used in the production and selling of products and services, as well as net cash from operations. This determines if companies can pay bills or operating expenses.

• Investing Cash Flow: Investing cash flow refers to the amount spent or earned from investments, such as the purchasing and selling of assets and securities.

• Financing Cash Flow: Financing cash flow refers to the money used to fund the company and its capital. Investors use this to determine a business’s financial health and capital structure. Financing activities include issuance of debt or equity and paying dividends.

Why Is Cash Flow Budgeting Important? 

The main purpose of cash flow budgeting is to predict your business’s ability to gain more cash that you send out. By identifying how much money comes in and out of the business, you can forecast cash shortages and prepare for them accordingly. 

Understanding your cash flow also gives insights into what areas of your business you can expand, such as developing a new product or hiring more employees. Proper budgeting also means that your business has liquidity to pay off debts, bills, salaries, and other expenses. 

How To Better Manage Cash Flow

Let’s go over four tips for a fractional CMO’s cash flow budgeting in Chicago:

1. Prepare a Cash Flow Forecast

A cash flow forecast keeps track of customer payment histories, industry averages, economic conditions, and other historical figures over a specific time period. This allows you to create more accurate and up-to-date projections of future cash flows.

List all of your income for the week or month and add up the total. This includes sales and non-sales incomes like tax refunds, grants, investments from shareholders, royalties, or license fees. Do the same for outgoing funds like for rent, salaries, assets, business loans, taxes, etc.

For each week or month, subtract the outgoing funds from the incoming funds to determine your net income, which will either be positive or negative. If you have too much negative net income, find ways to cut down on costs to ensure you have enough to pay your remaining expenses.

2. Manage Inventory

Not every item on your inventory will sell as well as others. For low-sale, obsolete, or slow-moving items, consider writing them off from your inventory.

Doing so may make you eligible for a tax deduction as it removes the cost of no-value items and prioritizes saleable products. You can seek help from your accountant for this or talk to your fractional CMO for cash flow budgeting in Chicago. 

This also helps ensure that you don’t shell out any more money on these poor-performing products. Other suggestions include selling them at a discount or cross-selling them together with your current products.

3. Send Out Invoices Quickly

Send your invoices out immediately (when possible) to prevent delays in receiving your clients’ payments. This is especially true for small businesses that need their clients’ payments as soon as possible. 

Before sending your invoices, make sure all details are clear and correct, such as the due date, payment instructions, and acceptable payment types. Be clear about any late fees as well. 

Consider electronic invoicing with software-based services or automation tools. (Check out this guide on the different advantages of mobile apps in financial services, or talk to your fractional CMO for cash flow budgeting in Chicago.)

4. Optimize Accounts Payable

The better you manage payments, bills, and other costs, the easier it’ll be to keep track of and maximize your cash outflow. One way to do this is by prioritizing your highest-interest credit card payments, then working your way down. 

Choose vendors with flexible payment terms to ensure you pay fair rates and don’t spend more than what you’re capable of paying. Prioritize invoices according to their due date, as paying every bill immediately may deplete your finances quickly.

Do account reconciliation frequently as well to ensure that your financial records are accurate and match external documents like bank statements, invoices, or credit card bills.

What Are Other Fractional Marketing Services?

The fractional CMO works with other departments to ensure a holistic and collaborative approach to business. 

Let’s go over some common fractional services.

• Fractional eCommerce Chief Marketing Officer: A fractional eCommerce expert helps online retailers and companies reach their target audience, improve their web presence, and convert more digital customers.

• Fractional Chief Digital Officer: A fractional CDO helps businesses leverage digital technologies and digital channels to achieve business growth, enhance customer experience, and drive revenue.

• Fractional Virtual Compliance Officer: A virtual compliance officer helps companies and all company operations adhere to industry and legal rules and regulations.

Interested in learning more about fractional services? Check out our video here:

Hire a Part-Time CMO in Chicago

Hiring a fractional CMO takes a big load off your shoulders when managing heavy tasks like budget allocation. Fractional CMOs help businesses thrive financially, cut heavy costs, and create opportunities for expansion and scalability.

The best part? You can achieve all this without breaking the bank!

Digital Authority Partners is home to Chicago’s best fractional CMO services. We help teams effectively manage their budgets and cash flows to ensure that no dollar is left unaccounted for. We provide tailored strategies that help teams manage all their finances to gain the highest return on investment possible. 

Contact us today to get started!