Craft Brewery Finance: Brewery Cash Flow Strategies for Growth.

Cash flow is the lifeblood of a brewery, and the efficient management of cash receipts, payables, payroll, and other transactions is a strategic priority for the growth-oriented brewery owner. Here are some of the cash-flow strategies that financially savvy brewery owners are using today to get that competitive edge:

  • Understand your operating cycle: Regardless of size, every brewery owner must deposit, monitor, and manage cash receipts; make payments; fund purchases; and invest in the brewery. Reviewing and understanding each step in this cash-flow cycle can help a brewery run more efficiently.

  • Review your payroll process: If you pay your employees twice a month instead of every other week, you will be managing 24 payroll periods instead of 26 during the course of a year, making your company more efficient.

  • Capital is so important to growing a brewery. If you don’t have what you need for your brewery’s development, all you’re doing is paying your bills and just getting by. Having enough working capital to pay those bills on time every month is important, but to take your brewery further, it’s growth capital you should be paying close attention to. To do that, you have to understand how growth capital works, what it does, and how it helps your brewery develop, thrive and grow.

Even if your brewery is growing, you may find yourself needing extra cash to cover day-to-day expenses such as payroll, rent and inventory, or to pay for short-term projects that could grow your revenue in the long run. Uneven cash flow is one of the biggest challenges of brewery owners, due to the nature of the business model. throughout all industries. In a perfect world, you’d walk into your local bank and walk out with a brewery loan long before you wound up in a cash crunch. Well, those days are long gone! If you haven’t been in business at least two years, or lack good credit and collateral, chances are a traditional bank loan is never going to happen.

A cash flow loan may be used for any business expense, but some common uses are:

  • Working capital

  • High ROI short-term opportunities

  • Purchasing highly-discounted inventory

  • Payroll

  • Marketing

  • Brewery expansion

  • Build out craft beer taproom

Short-term cash flow loans are best used for short-term projects that would divert money from day-to-day expenses but ultimately grow your brewery, like taking on a big contract with a major distributor or adding extra seating in your taproom. If you need cash fast, a cash flow loan may be your lifeline.

Cash flow can make or break a brewery's health. More often than not, maintaining it is a balancing act between credit and cash on hand, and it's a tricky tightrope to walk. As your brewery begins to grow, this intricate balance has the potential to become even more complicated. Especially if you're relying on distributors or irregular payment cycles, your cash flow can become unpredictable. As the numbers grow, so do the stakes and the best possible asset you can have is a plan. Have brewery cash flow questions? We've got answers!