Tip #1: Recognize The Cash Value Of Assets
Whether it’s surplus inventory, real estate or equipment, any asset that’s not helping to generate revenue is a burden on your business. Consider converting it to cash, which you can use for daily expenses or to reinvest into more profitable uses.

Equipment leasing lets you avoid spending a lot of cash on a down payment or purchase before you gain any revenues from use of the equipment. You may be able to spread out virtually all ownership costs—including maintenance, repairs and upgrades—across a series of fixed payments.

Reducing overhead costs is a great way to maintain liquidity. At the beginning of Covid-19 shutdowns, for example, Adams’ team cut expenses and canceled all nonessential recurring payments. The pandemic also demonstrated that many people can work from home at least part of the time, notes Gregory. Selling or vacating office space your employees are no longer using will reduce or eliminate monthly expenses including rent, utilities and office supplies.

Tip #2: Regulate Your Cash Flow:

Improve your liquidity by syncing up your revenues and expenses and reducing account-related overhead. Get paid faster, avoid paying too early and increase the efficiency of your account management processes.

Maintaining liquidity is all about speeding the journey from sale to cash. Since checks take the slow lane, offer alternatives such as ACH, debit card, mobile payments, and credit card on your website. These types of payments can offer same to next day business deposits. When you must take checks, make sure you can scan and deposit them electronically. Finally, automate your reconcilement process to speed revenue recognition and reduce manual processes.

Distribute funds efficiently, and don’t commit them until you need to. Automate your payables and enhance security by integrating all payments onto one platform. And pay digitally when possible to reduce manual handling and increase cash flow predictability.

More businesses are using commercial cards rather than checks to buy goods and services. Card payments (whether in-person or online) satisfy your obligations immediately, but you don’t have to pay until the card’s due date. You also benefit from greater security, control and reporting efficiency than you would with checks.

Tip #3: Borrow Cash To Grow Or Persevere

Debt is a fact of life for businesses. Used carefully, debt can provide the liquidity companies need during both good times and bad. Loans can help whether your company is growing or dealing with unexpected challenges.

A loan can be a lifeline for a business struggling to pay the bills during emergencies, as many companies learned during the pandemic. When Sebago closed in March 2020, the company owed $150,000 to food and drink suppliers. The brewpub furloughed most of its staff, slashed every possible expense and started delivering beer to pay down what they owed.

Then in June, Sebago secured a loan under the federal Paycheck Protection Program with the help of the business' TD relationship manager, Shauna Miller. “We wouldn’t be in business now without the PPP loan and the information we were getting from Shauna,” says Adams.

Loan proceeds can supplement working capital to provide liquidity when a company is growing. Loans backed by the U.S. Small Business Administration (SBA) are especially helpful at preserving liquidity because they require lower down payments and have longer amortizations (or terms) than traditional loans, says Tom Pretty, head of SBA Lending at TD Bank.

Kai Adams of Sebago Brewing used SBA-backed loans for his first, second and third brewpubs—not only for the real estate but also for the construction and to buy furniture and equipment. “Because of the business we’re in, our margins are very thin, and we wanted to make sure we could cover our debt with the cash flow we had,” he says. “SBA loans gave the bank the courage to continue investing in an industry that doesn’t have a high success rate.”

SBA loans are popular right now because of pandemic-related lending relief measures, Pretty says. "One of the huge benefits of SBA loans is that they really help entrepreneurs and small businesses keep their cash and their liquidity so they can grow their business.”

Lines of credit can provide valuable working capital for ongoing business expenses. When unexpected expenses occur, you can handle them without having to sell inventory or take other measures that might harm your business, notes Gregory. And they’re flexible like a credit card—you only borrow as much as you need, when you need it, and repay on your schedule (though interest is charged).

Is It Time To Discuss Your Liquidity Strategy?
Adams and Miller have worked together for years, meeting twice annually to review Sebago’s finances and discuss strategy. He gives her credit for identifying creative financing solutions for his business. “I used to feel that I shouldn’t show my cards, but with Shauna and TD, she knows my business, and I can talk through any ideas about what we need to change or if we need capital for something.”

Liquidity is top of mind for many business owners, and fortunately there are many ways to maintain it, whether through minimizing your assets, paying down your liabilities, managing your accounts carefully or taking advantage of credit.

“The ability to predict cash flow is hard enough,” says Gregory. “But to the extent you have liquidity needs, TD Bank will be able to meet them.”

Learn More
To learn how you can increase your liquidity, visit TD Bank's Small Business or Commercial Banking site to find solutions that are right for your business.