If you have a cash problem and need to find some financing for your company, there are three ways you may have overlooked.
1. Seller financing
Extending trade debt, say 30 to 60 days, is a very common way for companies to improve cash flow. In general, sellers are not very happy when this happens, and some even protest vaguely. Most businesses are small, and prolonged debt only hurts everyone in the long run. Consider: If you depend on one of your customers to pay you within 30 days, and that customer does not pay for 90 days, it can significantly affect your cash flow. If you have one of your main customers, the impact can be quite serious. You don’t have the cash to pay your invoice, so there is a ripple effect below.
This offer is different. If you have a good relationship with your vendors, it is sometimes possible to get them to agree to finance part of your company by extending their terms for a longer period of time, especially for a large order. If you are a new company with little or no history, you can contact the sellers who show you your business plan and the order documents you have already received. If the seller is confident that your company will be successful and will be one of the better customers in the future, they may want to give you a break now.
Another alternative is to guarantee the seller that you will have an exclusive supplier for an agreed period of time in exchange for longer loan terms. Or you can offer to pay a little higher than the market price in exchange for longer loan terms. This method can be dangerous because it determines the advantage of a higher price. When longer terms are no longer needed, it can be difficult to reduce the price you pay the seller.
Sometimes it is possible to persuade sellers to exchange a note or a capital position in your company that will be paid in lieu of a traded debt.
2. Prepaid Customers
If you have successfully demonstrated to your customers that you have delivered your order on time, you can persuade one or more of them to place a deposit of up to 50% on their future orders. You can add an incentive by reducing your price a bit in exchange for a deposit. Or you can give a bonus: if they order 100 products, you give 10 extra. Deposits may be requested from new customers, especially if there is a large or special order.
3. Trade and barter
Barter is probably one of the oldest forms of trade. It is the exchange of goods or services for other goods instead of simply using them as cash. Trade can be directly between the two parties or the trade can go through a barter exchange.
Barter exchanges generally work with a points system that has one point for every dollar. The exchange has members who accept the exchange of services and products. Suppose you need a new circuit ball, but you don’t need your product / service in a computer store. You earn points by sharing with people and businesses who need your product / service. You earn points by exchange. When you have enough for the desktop, you ‘get’ the desktop with the points you collect. The exchange sometimes charges a small percentage of the points for the services they provide.
Don’t limit yourself to thinking about what can be exchanged. Treat shopping like any other sale or purchase. Contact reputable companies. Don’t think that you have to download your product. Barter purchases are recorded as an expense in your profit and loss statement. Barter sales (where you trade) are reflected as income.
Barter organizations can be found on the internet, just put them in a trade and barter organization. Many cities have local barter organizations. Contact your local trading room. Yellow pages also provide lists.
Use these three methods to earn cash for your company.