Finding Money in Your Company

Posted: March 15, 2015 by Bill Cunningham in Manufacturing, Money, Operations, Planning

bill-cunningham-scOne of my business school professors quipped, “That business doesn’t have any problems that money won’t solve!” However, when you are that business and you need cash to stay in operation – it really isn’t that funny. Here are some tips to keep you going,

Start by looking for quarters in the sofa. When cleaning your house, and you lift up the cushions and find a few quarters – or when you reach in a pair of pants and find a five-spot, it gives you a great but short-lived feeling of wealth. The same can be true in your business if you look hard enough.

First of all, check your accounts receivable status. How much is outstanding, and what efforts have you made to collect it? If your terms are net 30 days and you’ve got a fair amount of customers in the 60 to 90 day range – then there is a source of cash for you. Many times a phone call will get the check in the mail to you right away. If many of your customers are small businesses like you, they don’t like to pay the bills until the latest possible opportunity.

Another thought is to change your terms. If you offer net 30, you might try changing to payable upon receipt. This has been accepted in many industries and companies. If you say it with a straight face, the people who pay the bills will schedule it accordingly. After all, it’s really not their personal money – and if the terms say “due upon receipt,” then that’s the way it gets processed. If you do business with large companies, you may find that they begin their processing at the end of the “net 30 day” period. By implementing this process, you may actually get your invoices paid in 30 days instead of waiting for them to process your paperwork.

If part of your business is customized for that particular business, it is acceptable to ask for a deposit up front. This is commonplace in the software industry, where a number of programmers may have to be dedicated to the task. Getting a deposit from the customer insures their commitment to the project, reduces your downside risk and, of course, improves your cash flow.

Have you looked in the warehouse lately. If its getting crowded in there, find out what stuff isn’t moving and have a garage sale. The items on the shelf don’t generate any revenue just sitting there – you might as well convert them into cash. You can even do it via the Internet through eBay and auction sites! There are even industrial auction sites for used equipment and machines. (Congrats to Xavier MBA graduate Dave Milam, who just sold his industrial auction site, iMark.com, for $340 million! – a great success story!)

While you are in the warehouse, look around and see if you have too much raw material? If so, cut down on your next order to get you through the cash crunch. Have you reviewed the performance of your suppliers? Are you getting the best prices for the volumes you are purchasing? A walk through the warehouse can jog your memory about the items that could have a significant impact to your cash flow.

Like finding the fiver in your pocket, there’s probably a lot more money lying around your company than you think!

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s