1) Bill Your Customers
Your clients won’t pay you unless you ask them to. Many small businesses only send out invoices when they find themselves short on cash. If you are taking on a regular client, negotiate a regular invoice schedule. Scheduled and prompt billing is the first step to improving your business’ cash flow; make sure that your system works. It puts forth the image of an organized operation, with its act together.
2) Trade Discounts Bring in the Dough
A trade discount is a percent discount given on condition to receipt of payment by a certain date (e.g. within 5 or 10 days). Even though trade discounts can be very small discounts of just 1 or 2%, they are very effective in encouraging clients to pay early. When a client pays you before his bill is due, he is effectively giving you a cash advance.
3) No Deadbeat Customers
Due Diligence is key to running a solid business, especially if it is a business in which a few clients or customers make up the major bulk of your revenues. If you are taking on a significant new client, check out credit references and discuss their payment history with their other vendors. Depending on the size of the account, you might want to run a credit check.
4) Inventory Diet
Your inventory represents money that is not garnering any interest or savings for you. Its primary purpose is to enable to produce customers what they want in a timely fashion. Re-examine your inventory and decide what wines/parts/designs/models can be done without.
For help during those times when you are in a cash flow crunch, check out our website, and find out how you can get a Business Cash Advance.