Here are a few quick and easy ways to accelerate your company’s cash flow
1. Turn credits into refunds:
- Review the Accounts Payable Aging monthly to identify vendors with credit balances.
- Contact all credit balance vendors to request a refund check be mailed promptly.
2. Extend vendor payments:
- Contact each vendor to negotiate payment terms; extend wherever possible.
- Discuss alternate payment methods each vendor is prepared to accept.
3. Accelerate customer payments
- For larger sales, request a portion of fees at the time the sale is initiated.
- Schedule interim payments throughout long projects.
- Consider offering a small discount for early payment.
4. Electronic payments
“Save paper, postage, and, often, manpower“
- Electronic payments can be scheduled for the exact due date, deferring the outlay until the latest time without incurring late fees.
- You may be able to negotiate lower prices with vendors by paying promptly and electronically via wire or ACH.
5. Accept Credit Card payments:
- Set up the mechanism to accept payments via credit card or PayPal to have funds transferred directly into your bank account, saving the 30+ day wait to receive a check.
- Consider the fees associated with credit card acceptance, however, before offering customers a discount for credit card payments.
6. Business Line of Credit:
- A business line of credit has greater flexibility than other loan options:
- It can be used to cover cash flow deficits on short notice (ie: to purchase seasonal inventory or to cover unforeseen operating expenses.)
- Interest accrues only for the period the LoC is in use, and can be paid off in full regularly.
