| Cash is the lifeblood of any business. As humans need | | | | time for receiving payment, it also reduces the time for |
| air to breath and food to eat, your business requires | | | | the bank to clear the payment if it is drawn on a |
| customers that provides the primary substance that | | | | non-location bank.5. Consider Accounts Receivable |
| keeps a business in business: cash.But in the real world, | | | | Financing/Factoring: The process is simple: when a |
| businesses that invoice their customers for payment | | | | company sells a currently due invoice from a |
| can face a challenge in getting paid, especially when | | | | credit-worthy business customer to a third party (The |
| the customer may be another business or a | | | | Factor) in exchange for getting that money today. The |
| government agency. Somehow the terms "NET 15, | | | | factor advances a certain percentage of the total |
| NET 30 or DUE UPON RECEIPT" seem to go | | | | amount of the invoice and holds a percentage in |
| unnoticed by the customer and the invoice doesn't get | | | | reserve. When the customer pays the invoice, the |
| paid until 60 to 90 days after the work has been | | | | factor releases the reserve, less the agreed upon fee |
| performed. In other cases, the invoice may be paid | | | | (discount rate). With factoring, your company's credit is |
| after 120 days - if not paid at all. For the seller, this can | | | | not evaluated -- your customer's credit is. Factoring |
| be the start of cash-flow challenges, which can rapidly | | | | can be used as temporary or alternative financing for |
| escalate into a crisis.In spending over 10 years working | | | | many businesses. Traditionally, manufacturing |
| to help turn around financially troubled businesses, I | | | | companies used this form of financing but today |
| have found that the key to better cash-flow is to | | | | factoring is available to many other companies ranging |
| ensure that the business implements a system to get | | | | from construction, import/export, distribution -- even |
| their receivables paid quicker and faster, with less pain | | | | companies that provide services to government |
| for the customer.Here are eight ways to start | | | | entities.6. Consider Purchase Order Funding: If your |
| improving a company's cash-flow today:1. Give a | | | | businesses provides services to other companies that |
| Discount for Paying the Invoice Before the Due Date: | | | | require purchase orders, you can secure short term |
| Offer an additional percentage off or maybe a fixed | | | | funding to be used to finance the purchase or |
| dollar amount off of the total invoice if they pay within | | | | manufacture of specific goods that have been |
| 5 days of the invoice date. This strategy works well | | | | pre-sold by you to your credit-worthy customer. This |
| because it provides a win-win situation for you and | | | | type of funding entails issuing letters of credit or |
| your customer. If they pay before the due date, they | | | | providing funds that allow clients to secure the |
| will save some additional money and you will be paid a | | | | inventory they need to fulfill customer orders. This |
| lot faster. If they do not take advantage of your | | | | frees up existing cash that your business has on-hand |
| generous offer, they will be responsible for the balance | | | | for other use.7. Have a Referral System: Word of |
| owned. It also helps keep good customers because | | | | mouth marketing is the most powerful and |
| you have provided an incentive for them to continue to | | | | cost-effective way for a business to acquire new |
| do business with you.2. Have an Internal Collections | | | | clients. People like to do business with those they like |
| System In Place: More often than not, a small business | | | | and trust; the same is true for businesses. You need to |
| will focus so much on acquiring the client and | | | | have a referral system in place with your existing |
| performing the work that it doesn't dedicate as much | | | | customers, business partners and even your |
| time and effort to collect payment. Make sure you | | | | employees to help them to refer you business. A great |
| send your invoices out immediately upon completion of | | | | book that will show you how to develop a |
| your work or shipping of your product. If you have the | | | | word-of-mouth based marketing and referral system |
| resources, have your staff send a friendly email | | | | about this is The World's Best Known Marketing |
| reminder or make a phone call ten days before the | | | | Secret by Ivan Misner, Ph.D., who is also the CEO and |
| due date (if it's a Net 30 or more term) to the | | | | Founder of BNI (Business Network Int'l) , the world's |
| customer reminding them to make payment.3. Accept | | | | largest business networking and referral organization.8. |
| Credit Cards: One of the simplest ways to increase | | | | Create a Rewards Program: Almost every major |
| cash-flow is to accept credit cards. Once the charges | | | | business - from supermarkets to office supply stores |
| are made, the money is transferred to your account, | | | | to credit cards- has a rewards program. Some offers |
| usually by the end of the business day, or in some | | | | discounts to its customers in the form of a credit |
| cases, instantly. Studies have shown that people and | | | | towards a future purchase, or special product |
| businesses will spend more using a credit card than | | | | incentives (i.e. buy one get one free) or in some cases |
| they will with cash. Offer your customers the ability to | | | | even cash-back. You can create your own rewards |
| pay their invoices via credit card and your sales will | | | | program as a way to retain and reward customers |
| increase. Because there are thousands of credit card | | | | who pay their bills on time or ahead of time. The cost |
| processors in the United States, you are in a position | | | | is minimal to your company and results in future, higher |
| to compare and negotiate processing rates and | | | | value purchases with an increased frequency, and |
| equipment rental fees.4. Accept Checks By Phone, | | | | customer loyalty. You can also implement a rewards |
| Fax and the Web: This is a very easy way to have | | | | program as part of your referral system.By |
| your customers pay, with little hassle. There is | | | | implementing some or all of these strategies, you can |
| inexpensive commercial software available for | | | | help ensure that the cash keeps flowing and your |
| purchase which will allow you to create a check from | | | | business remains a viable entity.© 2005, Timothy |
| your printer, based upon a check that your customer | | | | M. Houston. All Rights Reserved.Timothy M. Houston is |
| faxed to you, or gave to you over the phone. Also, | | | | the President of Houston & Associates, a commercial |
| there are online services available which will allow your | | | | debt management and business consulting firm based |
| client to "write" a check over the internet, email it to | | | | in Staten Island, New York with affiliated offices in |
| you and then you can print it and deposit it to your | | | | Texas, California and Florida, ( |
| bank account. This is especially a great tool to use to | | | | In 2005, Tim launched ( which is dedicated to helping |
| improve cash-flow because while it reduces the wait | | | | small businesses to stay in business. |