Finance - Money Problems
Basic Money Shortage Solutions


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Money Problems

Basic Money Shortage Solutions

Basic strategies

Speeding inflow
The first area that can be adjusted during a cash crunch is cash inflow. Look at all of the receivables owed to you. Determine whether or not there is some means by which you can receive payments earlier than anticipated.

Get on the phone. Use your most upbeat tone, and try a little honest begging"We're a little tight on cash right now, and I would greatly appreciate it if you could pay us now." If necessary, offer small discounts for faster payments or larger discounts for prepayments.

If you are working on custom projects for businesses or consumers, don't hesitate to ask for progress payments, even if they weren't part of your initial terms.

Slowing outflow
Decide how serious your situation is. Then decide which bills you must pay. Remember, very few businesses of any size pay their bills within the stated terms.

If you owe a particularly large amount of money to one key supplier, be cautious. If you intend to pay some of the bills significantly late, advise it of this in advance. If you are fairly certain as to when, specifically, you will be sending payment, consider offering this information as a promise in exchange for continued credit on new purchases.

Crucial creditors
Make sure that you decide who gets paid and when, not your creditors. Don't be pressured by phone collectors, or by the firms that complain the loudest. Pay those creditors that are most important to the continuation of your normal business operations first.

Some creditors may threaten, "We'll be taking further action," or "We'll be turning your account over to a collection agency," or "We'll see you in court." Don't panic. If your account is turned over to a collection agency, this will be the least of your worries. If a creditor does take you to court, the hearing date will be months down the road.

If you donít know when you will be able to pay a bill, donít let a creditor push you into making a payment promise. If you renege on a payment promise, the creditor will only become more aggressive. Instead, tell creditors that you have placed them on your payment list. Assure them that you havenít forgotten about them. Let them know they will be paid as soon as possible, but you just canít say when exactly that will be.

Noncrucial creditors
Donít forget about noncrucial suppliers, but pay these vendors only when you have the extra funds. Again, as you did with crucial creditors, prioritize and pay those suppliers whose continued services or goods are most important to the maintenance of your business.

* Source Streetwise Small Business Start-Up

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