By Zelda Greenberg
Are you a little short on cash? Does it seem like every time you turn around you seem to be strapped for cash? Every business goes through the challenge of how to improve their cash flow situation. There are a few basic steps that you can do immediately to get the cash coming in faster.
How often are you sending out statements? If you’re like many small businesses the answer is, when you get around to it. This is definitely not the right attitude to take when you are in need of a cash infusion. Set aside a designated time each week for sending our statements. Make this a top priority. Consider this, once you mail the statement the customer receives it and puts in in their payable stack. They will then pay this bill when they get around to paying. Which can be in 7, 21,45 and some pay in 90 days…ouch! The longer it takes you to send out a statement the longer you wait to collect.
Offer customer incentives and rewards for paying early! If you have a customer that typically pays late then offer a 2% discount for paying in a much reduced period such as in 7 days, then offer a 1% discount net 10. The goal is to get the money coming in much faster. There will always be those that continue to pay in 21-45 days (average) but a few will jump at the chance to get a savings.
Check Please! Have you shopped in large retail shops lately? They scan your check and hand it back. The check is treated like a debit card. You get paid instantly instead of the typical 3-7 day wait for the check to clear the bank period. This will become more popular and become the norm soon so why not jump on the bandwagon now.
Inventory Reduction. Do you really need all those widgets and gadgets on the shelves? On the shelves and not moving is costing you money. Order fewer products. Look at what your business really needs on a weekly, monthly or quarterly basis. Then order accordingly. You can’t afford to have your money tied up in inventory that sits on the shelves for long.
Trade for services and goods. It’s the old fashion barter system, you have what I want and I have what you need. Review what your customers have in goods or services. Talk to them and work out a trade. Perhaps it is a dollar for dollar trade or something with a mix of trade plus fee. Get creative and ask because if you don’t ask you don’t get.
Consolidate Loans. Are all those small business loans breaking you? Can you say, renegotiate? Renegotiate the terms of the loan(s). Interest rates have changed and most likely they have decreased since you got that loan. Go back to the bank and credit card companies and ask for a lower rate. You can also consolidate a few of those loans. Put a couple of loans together at the lower interest rate. This reduces a payment and every little bit helps you.
No Free Lunch. Forget taking clients out for lunch. It’s too expensive. Instead offer to take them for coffee or tea. Make an excuse that you are in meetings all week, all month and can work in a mid morning or late afternoon coffee. Then meet at a coffee house, there are plenty of them on just about every corner. Coffee is a lot less expensive than a meal.
One final thought, many restaurants are not raising their prices. Instead they are reducing portion sizes. These establishments have seen cost of food soar and they have a fixed menu so they are reducing the size of that juicy steak. Get creative, are there ways you can trim your product without sacrificing quality? Try different things until you find what works for your industry.