Lots of small businesses hit rough patches with cash flow now and then, needing cash ASAP. When owners run low, they often think of hitting up the bank or getting a loan. But before diving into expensive options like overdrafts, there are other tricks up your sleeve. Your needed cash might actually be hiding within your business – stuck in inventory, assets, or with your debtors.
By tweaking your business systems, you can often free up funds internally, possibly covering your immediate needs. Plus, the hunt for these funds forces you to tighten up how you run things, a win-win.
To scrounge up cash from your business, check out:
- Assets: Everything from what’s owed to you, stock on hand, prepaid expenses, vehicles, equipment, and property can be sources of quick funds.
- Debtors: Are your customers taking ages to cough up cash for what they’ve bought? Time to tighten things up:
- Send out invoices pronto, and make it clear payment’s expected quick.
- Change up payment terms to get cash in faster.
- Chase up late payments politely but firmly.
- Think about factoring – selling your invoices for quick cash, even though it comes with a fee.
- Inventory: Got too much stock sitting around? Sell slow-movers off or talk to your suppliers about taking some back temporarily.
- Pre-paid expenses: Check if you can spread out payments for services to ease the cash flow strain.
- Assets: Do you really need everything you’ve got? Selling off or leasing unused assets might bring in some cash.
Don’t forget, your customers and suppliers can be lifesavers too. Get creative with:
- Customer payments: Encourage them to pay with credit cards or set up progress payments for ongoing services.
- Suppliers: Ask for extended payment terms or split payments to give you some breathing room.
- Discounts: If suppliers offer discounts for early payments, grab those savings.
Remember, these tips might not fit your business like a glove. But hey, if you need more tailored advice on finding cash within your business, give us a shout.
