Cash Flow Hacks (Part 2 of 3)
Cash flow problems don’t have to hold you back. In our last blog, we went over the first 3 ways to improve your cash flow: rework existing financing, convert excess inventory, and eliminate prepayments and/or deposits.
Now, we’ll go over 3 more strategies to free up cash and keep your business thriving:
- Aggressively negotiate credit terms with suppliers: Ask for discounts where applicable and ask for the most competitive rates. Have the conversation, but make sure it’s the right conversation. If you need to huddle with someone, we can help.
Our experience: A mattress business came to us looking for credit to buy supplies for a large contract opportunity. In a day we negotiated $120,000 in new credit for the client with 5 vendors who had cut him off and wouldn’t even take his calls. This was accomplished by addressing their concerns about how they would be guaranteed payment and get back a little on the old bills as well.
- Eliminate unnecessary equipment: Vendors can make leases, maintenance contracts, and other monthly programs very attractive. Do your homework. That said, selling some of your equipment and leasing it back can also serve to free up cash. Also sell off any inoperable or unnecessary equipment and raise cash. Finally, sell off equipment that has debt associated with it such as a bank loan or equipment lease, where the equipment is no longer necessary for your operation. This will provide a perfect opportunity to open discussions about repackaging your loans with the lender and lowering your payment. If you just turn over the money from the sale (which you are obliged to do if they are secured) your payment won’t change.
- Create repayment overtime: One of the problems with cash restraints is the damage to your corporate and personal reputation. Creditors become more aggressive in their demands for payment, less flexible in payment options, and can actually increase the price. A third party such as IDF can help. If the creditor realizes you now have a plan, then they will have more confidence in your ability to pay and they will be more likely to work with you. We can even help establish legal footing that will assure your creditors that they can be satisfied.
Need help applying these strategies? Let’s talk.
