Ideas to Boost Short-Term Cash Flow Without Debt
If your business is currently experiencing a cash crunch, here are some ideas to boost your short-term cash flow without credit cards or other debt.
Solving Your Immediate Cash Flow Crunch
- Be aggressive to collect receivable payments. You can’t pay your vendors if your customers don’t pay you. Look at your receivables aging report to identify customers who have an outstanding balance. Focus on getting payments from these customers, or set up a payment plan. If a customer begins to have a history of paying late, ensure you are being paid for being their bank with adjusted pricing, interest and late fees.
- Review accounts payable procedures. Review your accounts payable procedures with your team, making sure that bills aren’t getting paid early without prior approval. Discuss whether it makes sense to take the offered discount or not. If you have to pay slow, be very strategic about who it is and how you communicated with them.
- Adjust your payments with vendors. Proactively work with your vendors to see if there’s any wiggle room to adjust your payment schedule. Be willing to pay a little bit for this flexibility, but remember that the extra cost you incur to adjust when you can pay is likely cheaper than borrowing money. For example, negotiate ahead of time to pay your bill in 60 or 90 days, understanding you may have to pay a little interest for the flexibility.
- Convert noncash items into cash. Consider whether you have assets on your balance sheet that you can turn into cash, for example sell slightly-aged inventory or provide discounts to encourage customers to stock up on items. Go through your entire balance sheet to identify assets that fit this criteria.
Planning Ahead
Once you get through your current cash flow crunch, try to identify what contributed to your cash shortfall in the first place, and put a plan in place going forward. A cash forecast such as a 12-month rolling forecast is one great way to identify your needs over the next year before you actually need the cash.
Please call to get your 12-month cash forecast started or if you have any other questions about boosting your business’s cash flow.
