It is frustrating, as a business owner, when you struggle for cash in your business.
There are things that YOU should be doing to improve your own cashflow. These you can do BEFORE you try to borrow money:
1) invoice when the job is finished or when the goods are dispatched.
Invoicing at the end of the month means you are already waiting twice as long for payment, voluntarily!
2) change your payment terms
Yes, you can set 7 or 14 days payment terms. You do not have to use 20th of the following month just because everyone else does.
3) have robust terms of trade
These set out your payment terms in more detail, your dispute resolution process and gives you the ability to pass on any costs associated with collection of monies owed.
4) collect the money
Ask to be paid! Have a collection process, send statements and reminders. Have an escalating process and be the squeaky wheel.
All of these things should help speed up the cash flow cycle in your business.
Yet there are other things you could try:
1) take deposits
This gives you an immediate cash boost
2) take credit cards
This gives customers a payment option, but there are fees invoked which your business pays
3) offer spread payments
Companies such as www.feefunders.co.nz <> help you offer your customers the ability to pay over time whilst you get paid up front. The customer pays the fees.
Still need cash?
Then consider single invoice finance. Up to 85% of the invoice value into your business within 24hours. The facility won’t upset any banking relationships.
And lastly, but importantly, check your costs and spending.
If you consistently spend more than you earn then you will ALWAYS suffer.
What can you cut back?
Can you secure supplier discounts if you use invoice funding?
Can you use the cash from invoice funding to develop more profitable sales?