Cash flow issues are a constant source of worry for some industries, such as start-ups or seasonal businesses. This “lumpy money” syndrome, where cash from customers is intermittent and slow, affects many companies but luckily can be mitigated by following a few simple tips.
Cash Up Front: Instead of waiting for payment, ask for a down payment or retainer at the beginning of a large order. Due to the down economy, it is no longer taboo to ask for payment early on in the order process.
Credit Cards are Your Friend: Don’t worry about credit card processing fees. Sometimes, even just a percentage up front can be better than waiting months for cash. You can run your business while the bank does its thing.
Customer Credentials: You have to know who you are doing business with, and in the online age it is easy to do background research. If the research fails to yield anything, ask for references.
Factoring: In certain industries, selling your accounts receivable at a discount is an effective way to get cash up front. Some expenses like payroll have to be paid every month, and factoring can help even out cash flow.
These are just a few tips to bettering your company’s cash flow. Do what is right for your industry and eventually you will smooth out those lumps.
For the full article, see 5 Tips for a Better Cash Flow