As I have mentioned in past post CASH IS KING!! If you intend to drive your business to success you have to take charge of your cash flow and ensure that it is ‘flowing’. The issue of cash flow is a multi-faceted gem that needs to constantly be monitored and ‘polished’. You cannot realize business success without hopping in the driver’s seat and driving your cash flow. This is evidenced by the ever increasing number of business that are not thriving… and the number of “going out of business” notices that we are seeing. Yes, we are experiencing economic challenges in both the professional and personal sector, but we do not have to take a wait and see approach.

1. Get busy recognizing where your cash flow challenges are. Are you allowing those that buy your goods or services to adopt a slow pay policy? Whether it is a slow leak or a fast leak, slow payments are an increase in your cost of doing business. Put your customers on notice that they need to pay in a timely fashion. Whether you choose to adopt a policy where you require payment at time of providing goods/services or allow your customers to pay you within a certain time frame you need to maintain control of the process. I recommend the pay as you go option, but realize that may be something you will work with as your comfort level allows. Be aware that, if you allow customers to pay within a certain time frame it is essential that you don’t allow them to ‘forget’ about you. Follow up in the form of a statement – 15 to 30 days after payment was due. You might then try a follow up phone call or letter. It is a good idea to have a plan “B” in place, in the event the slow pay drags on beyond 60 or 90 days; either in-house collector or a collection agency. The phone calls don’t have to be threatening. We find that making calls as a courtesy, “We wanted to ensure you received the invoice and that there is not a problem with the services you received,” is often all it takes.

2. Funding – A revolving line of credit with your lender is a good tool to establish in your business arsenal. A revolving line of credit can open up funds to allow you to take advantage of cash payments to your vendors, when they offer specials, and a plethora of advantages to keeping “cash on hand”. In the event that a revolving line of credit is unavailable to you in your business (often the case with new startups or those that might be extended beyond what the lender feels is a good risk) there are some wonderful alternate funding options open. Factoring is a great option to the traditional lender and is a great way for a business to improve cash flow without incurring additional debt.

3. There is a lot to be said for the tried and true art of putting something away for a rainy day. We all know that in business, as in life, there are ebbs and flows. If you have a program set up with your lending institution where they take out a certain percentage of your deposits, off the top before they even hit your business account, you will find that it is easier to implement a savings program. If you can establish this practice in the good times, then when times are lean, you may have set aside enough to fall back on.

Please contact our office and we can discuss some of our alternate funding options to help improve your cash flow. Or you can email me directly at Kim@Funding4You.com.