Profit is important but cash flow is essential. Sometimes, you need money in the bank immediately but slow payers or slow business cause delays. Here are some tips to generate quick cash:
1. Chase debts
Your debtor book – money your clients owe you – is a good place to start. Time spent chasing debts, even door-stopping late payers can pay quick dividends.
2. Stage payments
If you’re carrying work in progress on your books, turn it into cash by negotiating stage payments rather than waiting to the end of the project or ask for payment in advance of delivering goods.
Sell your debtor book to a finance company at a discount in return for instant payment. Let them collect the money.
4. Discount early payment
Offer slow payers a one-off discount or rebate if they pay within a specified time.
5. Special offers
Offer a very attractive short-term offer where one condition is payment in advance.
A quick advertising campaign, especially online with sites like Google, Bing or LinkedIn, can generate an immediate burst of cash sales but you don’t have to pay for the advertising for a month or so.
7. Call old customers
Contact existing and former clients. Make them a special offer if they place a quick order with cash up front. It’s cheaper and easier to sell to someone who knows you.
8. Sell old kit
Got an old smartphone, some redundant PCs, any old office equipment? Get onto eBay or Amazon or GumTree and sell it for cash.
9. Sale and leaseback
For more expensive assets, like property or cars, you can often generate cash by selling them to a finance company and then leasing them back. It may cost more in the long run, with interest, but you get cash quickly.
10. Extend supplier credit terms
Agree extended payment terms for your suppliers so that you can pay them later than usual. This frees up cash for short term needs.