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