This is the title of a blog post today in entrepreneur.com, but it missed a couple of fast things that can be done. So, here’s our version:
1. Offer credit cards. We’re constantly amazed at how many businesses don’t take credit cards, especially outside the United States. Sure, the fees can add up, but you’ll see an increase in sales over the fee levels.
2. Offer payment terms, such as 2% discounts for payment in 10 days. About a third of your customers will take the discount, which will definitely help you collect faster. Again, the acceleration in cash flow will help you grow faster through increased cash flow.
3. Consider factoring your receivables. Sure, the interest charges can be onerous, but it’s worth a look.
4. Obtain a business credit line. If you have a plan for expanding sales and improving cash flow, you can talk to local community banks, such as Mid First. The large money center banks are hopeless if you have less than 50 employees. If you have a lot of high-rate credit card debt cluttering up your balance sheet, you can use the credit line to pay that high rate stuff off..
5. As mentioned in our last post, it appears that the Small Business Administration (SBA) is making working capital loans in the United States, at least. We understand that there is no direct tie to receivables (although their quality is probably a factor), and no tie to other collateral, such as your house.
6. Consider private debt, or selling a portion of your business to an investor, to rid yourself of high-rate debt. With the decline in interest rates, many private investors are looking at new ways to earn higher returns. You can offer debt, or even a convertible preferred, convertible into stock of your company if you get behind on payments.
7. As your cash flow improves, set up an internal payment plan to pay off high-rate credit card debt you may have incurred.
8. You might even talk to the credit card companies about reducing the rate on the money you owe them. They won’t want to negotiate, but if you skip a couple of payments, they’ll be al ears.
OK, so go out and try these ideas, and report back!