With the current state of the economy, many businesses are facing a shortage of cash. These businesses may have tried tightening their belts by cutting hours, laying off employees, offering discounts, or selling inventory and equipment. While most of these actions may help, they sometimes aren’t enough. So what do you do when you need quick cash for your small business?
Work with Your Own Vendors
If your small business is having a temporary cash-flow problem, you could try reaching out to your vendors and renegotiate the terms to allow you more time to pay them or make smaller payments. If you have been working with them for a long time and have built up trust with them, there is a good chance they would accommodate your request.
Another way to keep cash in-house is to not pay your bills until the very end of the payment window. This is also a common practice among businesses because the more time your money stays in your bank account, the more interest it accrues. So if your payment is due on the 30th, wait until the last day to pay them before incurring a late charge. Which brings up another tactic… If you have to pay a late charge to buy yourself some time until you receive payment from someone else, you may have to bite the bullet and pay a late charge in addition to your regular payment.
Have Clients Pay Upfront
By requiring your clients to pay upfront, you might think you are jeopardizing keeping them as your client. Most clients would be fine with this situation, but if you never have requested upfront pay in the past, then why are you starting now? It’s a trust issue. Even if that’s not the case, some clients don’t want to pay anything until they’ve seen the finished product.
You can negotiate upfront payment using discounts. Offering a client a 5-10% discount if they pay upfront is a pretty good incentive for a client to get a better deal and feel good about the transaction. Yes, you might miss having that 5-10%, but you need that money now. If you feel the client is completely against the idea, try to bargain for half of the payment upfront and the other half due upon completion. Also, you can work with your client and arrange for them to pay you after they get paid themselves.
Another form of upfront payment is the gift card. If you have a type of business that can offer a gift card, it is upfront money for a future service or product that people will gladly purchase. Gift cards are usually purchased as a gift (who knew?), or they are purchased because they are discounted (pay $40 for $50 worth of merchandise).
Use a Factoring Firm
A factoring firm is a company that will buy your existing invoices. They will pay you what the invoices are worth minus a fee, which is usually a small percentage of the worth of the invoices. You get cash immediately, and they simply wait until the invoices are due and collect. Everybody wins and it can be a good way to get cash quickly.
Collect Past Due Payments
Sometimes, clients really do forget to pay on time. Others get lazy and wait until they are good and ready, counting on your business to not take action to collect. To make sure your clients make payments on time, it never hurts to send a little reminder through email or snail mail that it’s almost time to make a payment. Don’t worry about upsetting your clients in the situation; its business and they know they are obligated to pay you by a certain date.
If a customer or client has a habit of making late payments, you could encourage their timely payments by changing your policy to state that clients who pay late will have a smaller payment window the next time. For example, if you had previously given them one month to pay, now they’ll only have 15 days. That could be enough incentive to have them pay on time.
Use an Online Lender
If you need quick cash for your business, you may able to get a loan. Depending on how fast you need the money, a traditional lender, like a bank, might not be able to get the funds to you quickly enough. Instead, try an online lender like Affinity Beyond Capital (ABC). ABC offers a few options including a line of credit or a cash advance, and payment can often be approved and delivered in as quickly as the same day. These types of loans are efficient and very quick, and they can be the perfect solution to solving your immediate cash flow dilemma. They will also save you the stress of worrying about how to fix your current problem.
If you are needing quick cash for your business as soon as possible, contact one of our lending professionals at Affinity Beyond Capital today by calling (833) 234-6489, or check us out online.