5 Ways to Get Your Customers to Pay You Faster

A couple of months ago, President Obama announced a new White House initiative, called “Supplier Pay,” which is meant to encourage big corporations to pay their small business suppliers more quickly. Ever since the Recession, small businesses have had to wait longer for their larger customers to pay their bills with billing cycles stretching from 30 days to 60 and even 90 days after an invoice is issued. Such a long delay can take a heavy toll on a small business’ cash flow, often with painful results: they may be forced to cut into their profit margins by borrowing costly money, business growth can be stunted, and in some extreme cases, a business can even shut down completely.

Get paid faster in your businessWhether or not your small business works with big corporate clients, when your customers take a long time to pay, it can wreak havoc on your whole business. Though many small businesses owners tend to focus on sales and net revenues, without an adequate supply of available capital, you’ll spend a great deal of time and effort scrambling around to cover the cost of necessary supplies, inventory, payroll, and other typical operating expenses. This can lead to anxiety and pull you away from focusing on other, more important aspects of running your business.

So, what’s the solution? Here are five tips that any business owner can follow to significantly improve the cash flow within a business while trying to preserve customer relationships and remaining competitive.

1. Be clear about your customers’ payment patterns. Getting paid quicker starts with fully understanding your target customer. This may sound simple enough, but I’m amazed at how many businesses overlook this one vital step. When you consider your target market, what is the typical length of payment among these individuals, businesses, or groups? How do they prefer to pay? What potential obstacles get in the way of their ability to pay? Will certain value added products or services shorten the billing cycle? You need to be able to answer these questions and then you can begin to structure your business accordingly.

2. Be clear about how much cash flow you need to operate. As a business owner, you owe it to your business to be in touch with the flow of capital coming and going out of your business. You should therefore first learn how to read a cash flow statement. But above that, you should also be aware of and have a plan for your business’ essential, non re-occurring expenses, such as big equipment purchases or property upgrades. Once you are clear about your customers’ payment patterns and your business needs, you can structure your payment collection policies accordingly.

3. Walk away from no-pay and extremely slow-pay customers. I know it’s hard to turn away potential sales. But, at the same time you want to generate the kinds of sales that will actually pay your bills with the least amount of headache. If you extend credit in your business, you need to establish a set of criteria that will help you weed out the good (i.e. profitable) customers from the bad ones. You also need to set reasonable time and amount limits on this credit. Again, this will go back to being in touch with the operating needs and flow of your business as well as your customers’ needs and payment behavior. If this is hard for you to figure out on your own (and for most business owners it will be), then make sure to consult with a qualified professional, such as a CPA.

4. Look for creative ways to get customers to pay quicker. There may be many small things that you can do to encourage your customers to pay quicker. For example, you can offer your best customers a small discount if they pay right away or require that clients make a down payment before any work is completed.

5. Look for other ways to generate cash flow. Another option is to open your business up to a slightly larger target market that includes those customers that tend to pay quicker. You can do this by adding another product or service, tweaking an existing one, or simply directing part of your marketing efforts to this new group. This can help you generate needed cash flow, while allowing you to keep your bigger, slower paying customers.

Over to you… What strategies do you use in your business to help ease the cash flow crunch caused by slow paying customers?

Five Creative Strategies to Improve Cash Flow with Limited Business Credit

Remember the good old days when credit lines flowed like water and all you needed to do was call the bank to get set up with short-term financing when you needed it? Those days are long gone and small business owners are being forced to find other ways to free up much-needed capital.


Here are five creative strategies to help keep the cash flowing in your small business:

1. Join a barter network

Ever heard of a barter network? Here’s how it works. Let’s say Company A wants to open a booth at an exhibition but it needs cash to do so. Company A has broken-down farm equipment that Company B is interested in fixing and selling. After selling the equipment he can use the cash as bartering dollars to pay for another network member’s (Company C) display booth. Bartering is an excellent means to conserve cash and it can really pay off, quite literally.

2. Check your recurring charges

Recurring charges augment a company’s expenses automatically and endlessly. It pays to take a good look at your bills, particularly those that recur automatically. Most companies can cut down on a lot of expenses without even feeling any pain. Just two examples: Replacing an expensive monthly bottled-water service with a far less expensive filtration system and using a PR firm on a per-project basis rather than a set retainer.

3. How about billing twice a month?

Many companies bill clients on a 30-day cycle. But if you have to pay your employees twice a month, this can cause cash-flow difficulties. Why not invoice clients twice a month? One company did so and reported that more than 90% of its clients didn’t mind the change because it still allowed them 30 days to pay. The holdouts can be billed once a month.

4. Prevent bad debt by sending pre-lien notices

An effective way to prevent bad debt is to send pre-lien notifications to each customer on all jobs exceeding a certain sum (say $5,000). The notices should state that the company is protecting its right to place a lien on the merchandise that was purchased if the bill isn’t paid within the pre-set time. One large company reports that after sending out the notice, bad debt shrunk by $350,000 within a year and a half.

5. Think positive – drive your profits

If you are worrying that your bank might call your existing loans, look for ways to drive your profits. One company reports that it found ways to purchase inventory more efficiently, changed pricing strategy, and used incentives to raise the team’s productivity. As a result the company drove profits from 1% to 7%, and the bank expanded its credit line despite the crunch.

How to Save Money on Business Travel Expenses

The cost of business travel can really add up, especially when travel is a frequent part of doing business, and it can put a great deal of strain on tight budgets. Here are a few simple ways your small business can save money on business travel expenses without cutting back on trips:

Renting Cars

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  • See if your business can sign up for a frequent-rental program to take advantage of free rental days or rental discounts.

  • Instead of renting cars by the well-known companies, such as Hertz, Alamo, or Budget, seek out the smaller companies that operate away from the airport or travel center. (Many of these companies may even provide a courtesy shuttle to the airport).

  • Stay away from the “extras,” such as rental insurance, EZ Pass transmitters, GPS systems, and an advance fill-up of gas.

  • Pay attention to the fine print for restrictions, such as mileage caps.


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  • If you will be staying in a particular area for more than two nights then you should look into hotels that offer extended stay rooms. These rooms come equipped with a full kitchenette. You could head for the local grocery store and put together your own meal at a fraction of the cost.

  • Take advantage of the free breakfast offered at many hotels

  • Stay away from using the hotel’s room service to avoid paying unnecessary room service fees as well as exorbitant food and beverage prices.

  • Where possible, bring along your own snacks to help stem a munchies attack.

Air Travel

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  • Save money on airline tickets by booking trips a month in advance. Where possible, schedule flights for the middle of the week (Tuesday- Thursday), and try to fly into alternative airports. For domestic flights, look into discount airlines, such as Southwest and JetBlue.

  • The Internet is a powerful tool in helping small businesses locate low-cost airfare. To make your searches more efficient, go to Kayak.com. This site sifts through airfares as well as hotel rates, and other travel products from over 140 different sources. Choose the offer you want and Kayak.com will direct you to a site where you can buy the ticket.

  • If you will be bringing a lot of luggage with you, then be sure to check the luggage fees beforehand and shop around. Where possible try to avoid checking in luggage.

  • If you will be driving your car to the airport, then be sure to park it in a long-term, off-site parking lot to avoid an outrageous expense when you come home.

Tips on How to Grow Your Small Business in a Recession

Yes, there are small businesses out there that are considering growth opportunities even as our current recession keeps a tight hold on our economy. But for those small businesses that are in this situation, any steps that they take to expand operations should be carefully implemented.

Here are a few tips on how to responsibly grow a small business in a recession:

Now is the time to re-examine, re-define, and streamline company objectives.

A recession often changes consumer demand, spending habits, and attitudes. It is thus extremely important that small business owners take the time to ensure that their businesses are operating in line with this a shifting environment.

Keep up the trust of your employees.

Even if you cannot offer a big benefits package, make sure there are methods in place for employee recognition and that the lines of communication are open.

Focus on customer service.

Catering to your customers is after all the focus of your business, and having good customer service does not have to get expensive. Like your employees, you want to build the trust, loyalty, and regard of your customers.

Develop creative, low-cost ways to advertise your business.

Getting your name out there effectively does not have to break the bank.

One of the biggest obstacles to small business growth is lack of funding or inadequate cash flow.

Make sure that you are doing all you can to maximize cash flow, such as implementing effective debt collection strategies, good price management, inventory management, and the coordination of equipment purchases. You should also be aware of all your financing options.

Stay on top of current trends in technology.

There are many software programs, services and devices on the market that will greatly improve efficiency and give your business a competitive advantage even over your bigger competitors. Many of these essential business tools are also relatively inexpensive.

Keep your eyes open for opportunities.

A recession may provide many opportunities to expand business operations. Real estate, for example, is much cheaper now and so is many raw materials. Consumers also have different needs, and your business may be able to capitalize on them.

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How to Build Your Business Credit Rating

Having a good business credit rating is a golden key that can help open the doors of financing- whether from the bank, vendors and suppliers, or potential investors. And with the current economic environment making it harder for small businesses to get the financing they need, this key is all the more vital to the success of a business.

Here are a few tips to help build up and maintain your business’ credit profile:

Tip #1: Separate your business credit profile from your personal credit. Many business owners are unaware of this option, especially if they are running a sole proprietorship, and they finance their businesses with their own credit and assets. This can be a costly mistake, since your personal credit profile will then directly effect your business credit, and visa versa.

Tip #2: Register your business with the major credit reporting agencies and monitor reporting. Banks, credit card companies, utility, and phone companies, as well as numerous other businesses will report billing and credit information regarding your business to the major credit reporting agencies: D&B, Experian, Equifax and TransUnion. With this information, the credit reporting agencies produce reports and credit scores. Keep in mind that any information on your business’ financial status, as well as any court cases and bankruptcies will also make their to these reports. Thus, it is important to monitor these reports regularly.

Tip #3: Make good cash flow management a priority. Make it a priority to pay your bills on time. Simple idea, right? It just may not be so simple to implement- especially if business has not been so great lately. In a previous article I included a few doable tips to improving your small business’ cash flow.

Tip #4: Seek out transactions that will improve your credit score. As I mentioned above, whether you realize it or not, chances are that your business is already generating data that can be accessed by a third party to determine your business’ credit-worthiness or financial stability. You might as well specifically seek out those arrangements that will build your business’ credit profile. You can find out which businesses report to the credit agencies and make it a point to do business with them and to keep your payments on time. The credit reporting agencies themselves also offer a number or credit-building services for a fee. 

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Stop Overpaying On Your Overhead Expenses!

Do you know that you may be paying too much for many of your overhead expenses? Here are 12 simple ways that small businesses can save a significant amount of money on some of the most common operating costs:

1. Cell phones and business credit cards

Cell phone plans and credit card options can vary tremendously from one service to the other, and it is quite possible that they are not best suited to your business’ needs and spending patterns.

To find the best fit for your business, you should check out BillShrink.com. Based on your answers to a series of questions about your cell phone and/or credit card usage, this free service then helps you save money by choosing the best calling plan or credit card for your needs. BillShrink also keeps track of any new products or offers so you can be sure that you are always making an informed decision.

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2. Shipping and Postage

There are several simple ways to save on your shipping and postage:

  • You can print Priority Mail (or higher) labels from the USPS online for free. You can also enjoy free delivery confirmation and discounts on the postage as well as the nice fact that you don’t have to wait in line at the post office.

  • With the USPS Priority or Express Mail, you can take advantage of the free envelopes, boxes, tape and labels. All the boxes and envelopes are divided into flat rate, Express Mail, Priority Mail and international mail usage. Alternatively, if space permits, you can save and reuse the shipping packaging material that you receive from others, such as bubble wrap, envelopes, and boxes

  • Make sure that you are also comparing rates between carriers. There are several sites offering this service for free, such as Shipping Sidekick and Ship Gooder.

3. Faxes

Stop sending your faxes from copy centers and print shops! There are a number of free web-based fax services available where all that is required is an email address.

4. Bank Fees

Are banks deliberately trying to catch their customers with insufficient funds so they can charge them exorbitant overdraft fees? According to this chart that’s certainly the way it looks. Whatever the case, it pays to be on top of the cash flow in and out of your bank account and to make sure that you “budget” a few days processing time for fund transfers and non cash deposits.

5. Software

To maintain the productivity and efficiency needed to be competitive and to stay afloat in this topsy-turvy economy, an increasing number of small businesses are taking advantage of a virtual sea of small business tools and applications. Though the majority of these apps are priced for the small business market, they can still put some strain on an operating budget. Many of these apps and tools have quality opensource alternatives. Some popular examples include, the Linux operating system, Google Docs, OpenOffice, GnuCash, and the Firefox web browser. There are also several mobile opensource apps. Depending on the needs of your business, you may be able to save yourself a lot of money in license and service fees by using these free options instead.

6. Utilities and resources

A small business can save a lot of money with some simple, low cost changes in the use of utilities and other resources. Some cheap energy-reducing products include: CFL light bulbs, a power strip that stops drawing energy when devices are turned off, timers, and light sensors. Resource-conserving practices include: shutting down computers when not in use, reusing shipping material, printing double-sided pages, using GPS when traveling on the road, and not letting vehicles run idle.

7. VoIP PBX Phone Systems

Having a reliable and multi-featured phone system is extremely important- especially these days when every customer counts. Several online companies offer low cost VoIP PBX phone systems. There are are also a few free, opensource options, such as this one from AdminsParadise that includes features such as, call parking, paging, Interactive Voice Response, music-on-hold, custom queuing.

8. Travel Expenses

The Internet has proven to be a powerful tool in helping small businesses locate low-cost airfare, auto rentals, and accommodations. To make your searches more efficient, go to Kayak.com. This site sifts through airfares, hotel rates, and other travel products from over 140 different sources. Choose the offer you want and Kayak.com will direct you to a site where you can buy the ticket.


9. Health Insurance

Maintaining the rising cost of health insurance for business owners and their employees has been a challenge for many companies across the board. Short of giving up on health coverage, here are a few tips to reducing expenses.

10. Technology/ Furniture

There are many ways to outfit your business with the appropriate technology and furnishings and still save money. The first rule of thumb is to try and wait where possible for any cutting edge technology since prices usually drop after the initial rush for the product subsides. For an updated list on the best web deals on computers and other electronic devices, check out Slickdeals.net.

Other tips include, seeking reconditioned or second-hand equipment and furnishings, and in some cases opting for equipment leasing.

11. Taxes

With the recent passing of President Obama’s stimulus bill, the issue of taxes has been getting a lot of publicity lately. Make sure that you are maximizing your business’ tax deductions. For more information, read this article, and here’s another.

12. Advertising

Though high-tech or high-profile advertisements and flashy brochures can impress customers, a little creativity with a focus on customer importance and involvement, can go a long way towards promoting your business and preserving your budget.

Keeping Your Business Out of Debt

As I scan the media these days, I often come across the personal accounts of people who were drowning in debt yet were able to pull themselves out and make their way towards financial stability. Since these people tend to be representative of the “average Joe,” the display of resilience and discipline is particularly inspiring.

But what about all the small businesses out there who are also struggling with debt? With consumer sales slumping across the board (yep, it’s official… we’re in a recession!), many small businesses are feeling the pinch.

And words such as, “debt consolidation,” “business restructuring,” and even “bankruptcy” are being thrown around like used tissues, without enough emphasis on what they mean for you and your business and without a clear way of evaluating your options.

In my experience, a small business’ financial stability can often significantly improve simply by making a few, relatively small changes in the way it operates. These changes broadly fall into one of three areas: cash flow, operating budget, and what I will call “outreach.”

Here are a few suggestions on how you can reduce expenses, increase efficiency, and cut back your debt.

Focus # 1: Your cash flow

Your cash flow is the flow of working capital that is taken in and given out of your business. It is effected by your accounts receivable, inventory, accounts payable, capital expenditures, and incurred debt. One of the biggest reasons why small businesses fail is that they are not paying enough attention where their cash is either going or being held up. The result is that they fail to recognize and react to an impending cash crisis. Here are some tips to improve cash flow:

  • Use software to help manage your business. Many accounting software packages offer a full range of features, such as financial reporting, payroll management, and billing. Popular options include: Quickbooks or Peachtree. You can also check out the free open source programs, such as GnuCash and TurboCash. Facility management software or scheduling software such as PeopleCube can also help improve budgets, increase efficiency and reduce costs.

  • Create a monthly cash flow schedule. Many of the factors effecting cash flow, such as outstanding accounts receivable or inventory, do not show up on an income statement. A cash flow schedule is specifically designed to give you a clear picture of each component of your business and how it effects your cash flow so that you can project a future cash shortage.

  • Look for ways to improve billing and receivable income. Make sure your bills are sent out on time and that late payments are accurately tracked. You can require that customers make an initial deposit when an order is taken, and offer small discounts to those who pay their bills quickly. You can also direct hard to collect receivables to a factoring company.

  • Know where to get temporary financing. Set up a business line of credit or apply for a business cash advance so you always have access to capital when you need it.

  • Track your flow of inventory. A lot of capital can be tied up in overstocked or unused products and supplies.

  • Stay on top of your bills. You can negotiate with vendors for payment in 30 days or more and pay towards the end of the term.

Focus #2: Your operating budget

Take a look at your budget to see where you can cut costs and increase efficiency. Even minor changes may add up to big savings in the long run. Here are a few suggestions:

  • Equipment purchases: Consider equipment leasing and financing instead of purchasing your equipment outright. You can alternatively buy second-hand or reconditioned equipment.

  • Taxes: Make sure that you are maximizing your tax deductions. For more information, read this article, and here’s another.

  • Outsourcing: Some jobs can be done more effectively, efficiently, and cheaply by people outside of your business. Popular jobs to outsource include: managing and creating web content, designing and writing marketing material, and handling minor administrative tasks, such as, data entry and answering phone calls.

  • Bringing work in-house: On the other hand, modern technology is making it possible for small businesses to tackle jobs that were usually either handled by outsiders or by people specially trained for the task. For examples of this, check out bMighty.com’s Server How-To Center or HP’s line of low budget equipment and tools that allows small businesses to create professional-looking printed material.

  • Business travel: Rely on telecommuting and webconferencing where possible. Search online for deals on cheap flights and hotel rooms, and be prepared where you can to be flexible. Alternatively, you can hire a travel consultant to do the work for you.

  • Conserving resources: Bring in energy-efficient products, such as CFL light bulbs and energy star equipment. Incorporate resource-saving practices such as, shutting down computers when not in use, printing double-sided pages, using time switches for lights and air conditioning units, using GPS when traveling on the road, and not letting vehicles run idle.

Focus #3: Outreach

This area is a combination of marketing, with a focus on customer satisfaction and customer feedback. One thing that many small businesses have over their bigger competitors is the personal relationship they can maintain with their customers. Do not overlook this vital asset! Not only will it help you to increase sales, but it can help you to operate more productively.

  • Focus on quality. The integrity of your products and services will form a lasting impression on your customers and can go a long way towards building customer loyalty.

  • Ask customers for suggestions. Actively ask your customers for suggestions or improvements via surveys or personal conversations and then follow through on anything that can be implemented.

  • Bring in CRM software. Several open source Customer Relationship Management (CRM) software options exist for small businesses, such as Compiere and SugarCRM. These applications allow your business to effectively manage and access your customer information and to use it to develop your customer relationships.

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Missing the cash flow to improve your cash flow?

Existing businesses seeking business financing have a harder time than start-ups, in securing a business loan. Entrepreneurs in search of start-up capital for their businesses can invent favourable figures in their projections used in convincing the bank to provide financing. A business owner looking for additional financing for his already established business does not have that luxury.

The bank wants to see cash flow figures. But lets face it, your looking for financing because you are in a cash flow crunch. Unfortunately the bank does not want to get involved in a risky deal. There might be a lot of potential for your business but it’s hard for the bank to ignore that your receivables have not been steady and your development costs, overhead, and incurred debts are discouraging. At this point, if the banker chooses to continue the meeting, your business plan comes into question. So what’s the plan? Are you there to expand or survive? Many businesses need additional financing just to survive. But the bank has little trust and hates to gamble, so convincing the bank to get involved in your struggling but highly potential venture is never an easy job.

The good news is that financing is available. Businesses, regardless of credit or a positive balance sheets, can utilize a business cash advance as an alternative to business loans or other traditional small business financing options. The application process is very simple, transfer of funds is fast and the only determining factor for approval is the volume of credit card sales your business does per month.

If your business processes more than $2500/per month in credit card sales, get a fast cash injection up to $250,000 and improve your business cash flow situation with an unsecured business cash advance from FastUpFront!

Free Online Business Finance Workshops

Today, I ran across a series of free business finance workshops that seem very helpful. They take a while to load, but they are very well done. There is a PowerPoint style presentation with a voiceover (not just reading what is on the screen.) Each workshop covers a different “How to” – I’ve annotated the links to the different presentations so you know what each one is about.

How to Develop and Write Your Business Plan  – This two-part workshop takes you through all the facets of the development and writing of a business plan.

Creating and Using a Profit and Loss Statement – This workshop is intended to provide deeper insight into the financial health of you company while going through the process of creating a profit and loss statement.

Preparing a Balance Sheet – This workshop is designed to teach you how to prepare the balance sheet you need for your business.

How to conduct a Market Analysis – This workshop teaches you how to gauge how much of an audience for your new business idea.

How to prepare a Cash Budget / Cash Flows Chart – The Cash Budget workshop is great for examining your business cash flows. (Don’t forget about our Business Cash Advance program for those occasions when you are in a cash flow crunch.)

Creating and Using a Strategic Plan – The strategic plan is different from the business plan. You can use it to access your business’ successes, weak areas and overall performance.

 Check out my other posts about online business finance tools for other resources.

Government Business Grants: Applying for Business Grants Online

After writing a post on making the decision to pursue the Government Grant path, I decided to put together some links for grant seekers.

· Here is a list of Federal Government Resources, including Grants, Contracts, and Auctions that provides a list of links to government grants.

· For information on finding and applying for government grants, and also managing the grants processes, check out Federal Funds Expre$$.  It is put out by the U.S. House of Representatives.

· Also, here is a site offering free videos on Locating Small Business Grants, Government Grants, and Other Grant Money.

· This Grants Information Center describes itself as “…one of a network of approximately 200 collections established by the Foundation Center, an independent national service organization in New York, to provide an authoritative source of information on foundation and corporate giving.”

 · If you accept credit card payments in your small business, you can get quick cash to tide you over while waiting for your grant by using Small Business Cash Advance.