1) The foundation of good cash flow practices lies in the ability of the business owner to manage their expenses. You need to consider every expense very carefully. Ask yourself, “Will this really enhance or add value to my business? Do we really need it?” If the answer is, “yes”, then you should ask for a discount, possible try to barter, or negotiate terms on the purchase. Remember, every dollar counts!

2) This is still in line with managing your expenses… budget! You need to make a list of your monthly bills and expenditures. Include on the list the due date of each payment and ensure that you keep to that schedule. This will help in two ways: 1) you can easily track your payments and budget accordingly and 2) helps prevent late fees or overdraft charges, which would add to your liabilities.

3) Review your invoicing/collection strategy to see any areas for improvement. You might consider billing from a ‘due upon receipt’ perspective. You may find that invoicing on a weekly basis, as opposed to monthly, can improve your cash flow. A courtesy phone call is often just enough to speed up a payment. Nothing harsh; “Hello, I just wanted to touch base with you and ensure you had received your invoice.” Something this simple can often move the dialogue along and, in turn, the payment.

4) If you accept credit cards that often improves your cash flow. Some programs feature a payment link right on the emailed invoice. This enables your client/customer to open the invoice, click the link, and have the convenience of paying the invoice and getting it of their ‘to do’ list. In the event you do need to follow up on a slow pay, you then have the added benefit of, “Hey, I can take your credit card payment over the phone, if that would make it easier for you.”

5) Factoring your invoices can certainly help with the cash flow. Many small businesses serve larger businesses that routinely take 60 – 90 days to pay. A medium to small business doesn’t have the luxury of reserves that keep cash flowing during that payment period. Factoring can instantly improve your cash flow, providing money for monthly expenses, payroll, vendor discounts, and generally making it easier to stay on top of your monthly budget.

Due to increased regulatory pressures, as well as an increasing number of foreclosures and related banking woes, fewer banks are in a position to assist small business owners in their quest for financial options to keep the cash flowing for the business owner. There is help in the form of accounts receivable financing for the small to medium sized business.

Accounts receivable financing, and other alternative financing options, are available through American Funding Solutions. We are a factoring business and we differ from a bank in many respects. A banker extends credit based on the financial condition and cash flow of the borrower. The borrower is expected to keep up with regular (usually monthly) payments to the bank… whether business is good or slow. Therefore, it is often required that the borrower meet certain financial requirements, including, but not limited to, a long, successful history of business with an acceptable cash flow history. These requirements are difficult for start-ups and certainly may prove difficult during the recent economic challenges we have been facing.

On the other hand, a factoring company does not require the client to demonstrate a proven history of profitability. As a rule, factoring companies are more interested in the credit history/financial strength of the client’s customers. If those that the client provides goods or services for are financially strong, then the factor can offer financing in the form of accounts receivable purchasing.

In other words, the factoring company views an invoice as an asset. The goods/services are delivered to the customer, the invoice is verified, and the advance is funded. Often times the transaction can be completed in a couple of days and the business owner can have the necessary cash to meet payroll, purchase supplies, pay rent, whatever is needed to keep the business’ cash flowing.

Factors often work hand in hand with banks. A business may have a working relationship with a banking institution and find that they suddenly have a need for additional working capital. Whether it is due to the sudden onset of the need or the fact that the client has a need that exceeds an existing line of credit, the banker can put the client in touch with a factor that can assist with a type of bridge financing that alleviates the crisis.

Factoring receivables is a great financing tool often utilized by small businesses. It provides a flexible, readily available financial tool to increase liquidity. We at American Funding Solutions are in business to provide working capital to growing businesses and we would like to help you sustain your business’ growth.

There is one additional proviso and that is simply, your customers must be creditworthy. There is some due diligence on our part in determining this last stipulation, but presumably, you would not be doing business with customers that could not pay you.

Let me first reassure you that factoring is an excellent fit for most businesses. I don’t know of a business in operation that does not have a need for working capital. The problems arise when a business does not have working relationship with a bank… or for any number of reasons, cannot qualify for a bank loan or line of credit. It is a fact that it is easiest to get credit when you don’t need it. First let me set the record straight, in the factoring relationship, you are not a borrower, and we are not a lender. We purchase your accounts receivables, that is called factoring. We purchase receivables for goods delivered or services rendered.

Once our business relationship is established you, our client, simply deliver your invoices to us. We offer as much or as little support in the billing process as you are in need of. Normally, you will have your advance within 24 hours. Then, once your customer remits payment we pay you the received amount less your advance and our fee. It is a very simple process and one that provides the working capital necessary to grow your business.

Please feel free to comment or ask questions. We are eager to assist you with your business financial needs.

It may, at times, seem like an impossible task, but most successful entrepreneur have stories about their early days in business and the seeming insurmountable challenges. Often, sheer guts and determination will see you through a rough patch. Be prepared to endure a rough ride and there’s a good chance you’ll come through the other side.

If cash flow is an issue then you can rest assured that we stand ready to assist you. Simply contact our office for some of the alternate financial products that we have to help you grow your business.

Web development costs may seem a bit pricey, but with some research, you will find that there are off-the-shelf options, as well as cloud-based tools that can help you get up and running for less. Don’t get left behind in the rush to cyber-space, you can’t afford to miss an online presence.

Many businesses fail because they take on a huge burden of debt in the early days of their start-up. Once that tone is set, they often continue to struggle to make ends meet.

Keep everything as lean as possible in the early days of your business. Keep an eye on unnecessary costs and ensure that you are moving money back into your business, rather than racking up debts. Many business advisers suggest start-ups look to family and friends for start-up capital, or resources to keep you afloat during lean times. If these resources are not available to you, then you may consider bootstrapping your business. Our firm also offers financial alternatives and we would be happy to visit with you about your options.

http://www.irs.gov/businesses/small/index.html