This current financial crisis has affected corporations in every sector of our economy. The inability to obtain credit has decreased the amount of inventory that is vital for conducting business on a day-to-day basis. If you are a business owner, whether outside or based within your home, here are five ways to protect your cash flow.
1. Depending upon whether or not you require payment up-front or offer a line of credit to your customers, you may wish to call on them to begin collecting payment. If customers have been lax in making payments and have outstanding balances, give them a call and offer then a reduction on their balance in order to facilitate quick payment.
2. The very foundation of any good business practice is to ensure that invoices are sent out in a timely manner. Ensure that you bill customers within a few days of the fulfillment and/or completion of the order or service.
3. If you are a home-based business where you are performing a service for a client such as article content writing for websites, ask for payment up front. If the client is not satisfied, you can always refund payment. Conversely, if you are selling a product online or offline, you may want to offer a discount to clients who can pay with a certain number of days.
4. Prioritize all payments due. For example, if you have a work-at-home business wherein you are sub-contracting work, ask these individuals if they can wait a week for payment. However, if you do have people on your payroll, pay them first. Vendors usually require payment within 60-90 days, and you may be able to negotiate payment terms with the telephone and electric company and/or submit partial payment where appropriate.
5. If things get really tight, ask family members for assistance. Also, in some cases your most loyal customers may be able to give pre-payment for future services and or products.
If you have been diligent in your work ethic and practices, there are still alternatives available to you even though you may experience a bump in the road during this economic downturn. Check out the Small Business Administration website wherein you may be able to obtain financial assistance such as an SBA loan.
More importantly, don’t give up. You can ride out the storm!
