From external economic pressures to industry challenges, protecting margin is becoming even more crucial for independent home improvement retailers and even more difficult. During a recent webinar hosted by the North American Hardware and Paint Association (NHPA), ECI Software Solutions business unit leader Kevin Ehinger shared areas where independent dealers may be losing margins and practical ways to improve payment processes, strengthen cash flow and reduce operational strain.
While it sounds tongue-in-cheek, Ehinger says one of the earliest warning signs that cash flow problems are imminent or already happening is trouble sleeping.
"I've had enough conversations with people in the industry over many, many years to know that when I hear that they're not sleeping or that they're stressed out, that there is something going on," he says. "You subconsciously feel it when you are thinner than you want to be. The thinner that margin over zero the more stress that it puts on you."
When those fears start creeping in, one change a retailer can implement immediately to improve cash flow and protect margins is having a working capital line of credit and understanind when, where, why and how to use it.
"I find in my experience that most people don't use it right because they don't think they need it, don't want it or other reasons," Ehinger says. "But if you don't have the capital and you are a heavy accounts receivable business or a heavy inventory and AR business, working capital credit can be a backstop when things stretch out for you. It'll help you sleep at night."
To learn more about how retailers are protecting margins and gain practical takeaways to improve your own cash flow, watch the full conversation here.
