Top 10 Things to Know About: Managing Cash Flow

Another webinar in the American Booksellers Association’s new webinar series “The Top 10 Things to Know About...”, which helps booksellers as they enter the final quarter of the year, took place on Thursday, September 10. The webinar focused on managing cash flow, and featured ABA CFO PK Sindwani. A recording of the webinar can be found on the Education Resources page on BookWeb.org.

Here are the top 10 points from the session:

1. Revisit sales and inventory budgets with current trends in mind.
2. Be cautious with cash and try to keep a cushion each week.
3. Manage inventory levels and buy using a hybrid model; buy seasonally for popular titles and monthly for everything else.
4. Use returns to manage cash flow; this means returning categories, such as travel, that won’t sell much this season as well as returning old inventory.
5. Keep open lines of communication with your credit rep, and reconcile books with publisher statements to be sure you’ve received shipments.
6. Establish a line of credit with your bank.
7. Make sure you receive funds from credit card vendors daily.
8. Adjust staffing levels to the current situation, and change staff hours based on traffic patterns.
9. Don’t leave any publisher co-op on the table.
10. In case of emergency, negotiate payment plans and deferrals if possible.

Here is a more in-depth recap of the webinar:

• Make Q4 plans based on the current realities of your business. Start by comparing the previous 60 days of sales to the same period last year, then project the rest of the year’s increase or decrease in sales accordingly. Revise projections weekly if possible.
• When forecasting, be conservative on sales and higher on expenses. Project higher expenses for cost of sales, supplies, shipping, and credit card changes due to COVID-19. Booksellers should also revisit their pricing policy for non-book items.
• Review expenses and community programs to see if they are necessary during this time.
• Monitor bank accounts daily, mail checks instead of wire transfer, and pay with a credit card if possible.
• Enroll with Bookshop, Constant Contact, Hummingbird, W.G. Ellerkamp, PartnerShip, and other services for savings.
• If booksellers give vendors their FedEx number for shipments, they should check their bill carefully for errors.
• Consider a hybrid model for buying: buy seasonally for popular titles and monthly for the rest.
• Booksellers should make sure they’ve ordered enough copies of important titles for the fall. This year more than ever, it will be harder to replenish important titles due to a shortage of printing facilities for publishers.
• Adjust inventory based on current sales.
• Returns can be used as a way to manage cash flow. Most publishers allow deduction for returns in transit. Booksellers should return all old inventory, keep fewer copies in stock, and assign a turnover rate for each season.
• Booksellers should make sure they’re current with all publishers before starting Q4 this year, since a lot of shipments were missed due to COVID-related shutdowns.
• Booksellers should also make sure they have enough of a credit limit with each publisher, and should work out payment plans if needed.
• Booksellers should make sure they’re receiving funds from credit card vendors daily.
• Rearrange staffing levels based on new traffic patterns, and change hours based on those patterns as well.
• Use all the co-op money that publishers allow, and be sure to invoice for co-op right away and deduct it from next month’s check.
• Establish hierarchy. See if you can defer payment for a month, or pay partially.
• Put donation buttons and options to buy gift cards at checkout.
• Negotiate rent forgiveness or deferral with landlords.
• Defer sales tax if allowed in your state, and defer employer payroll tax, if needed.