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Daniel Kehrer

Guide to Filling a Cash Flow Shortage

How to put more ready cash at your disposal


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Bringing cash in the door is one of the most basic requirements of operating a successful business and cash shortfall is as common as the common cold. But don't get caught up in fancy cash predicting formulas. The basics of cash flow are common sense.
  1. Translate sales into real money (cash) as fast as possible
  2. Bank that money
  3. Guard that cash zealously.

Action Steps
The best contacts and resources to help you get it done

Sign up for a merchant account


Merchant accounts allow you to take payments by credit cards. For speedier cash flow, credit cards can't be beat. You get your money fast and customers are accustomed to paying with plastic.

I recommend: Visa, MasterCard and American Express all have super helpful small business sites that can get you set up to accept credit cards. You might also consider PayPal if you are an internet business.

Revamp your invoices


A messy, unclear or inaccurate invoice is far less likely to be paid on time, if at all. Make sure what you send out reflects care and attention to detail.

I recommend: Inexpensive, easy-to-use invoicing software can help pull in more cash. MyInvoices is an excellent choice.

Crank up your collections


If you aren't having any luck collecting from clients, call in the collections cavalry. Get a collection agency specialist to help you out.

I recommend: Find one at The Association of Credit & Collection Professionals.

Get a line of credit with a bank


Tap the credit line to cover short term cash shortfalls.

I recommend: Wells Fargo, Washington Mutual and Bank of America are three major banks that cater to small business and offer credit lines nationwide. Or check out the SBA CAPlines Loan Program which helps small businesses meet short-term and seasonal cash needs with a revolving line of credit.

Create a cash-in/cash-out budget


This will allow you to estimate your cash in and cash out over a six-month period.

I recommend: Go here to download a cash flow budget worksheet template that will get it done.

Tips & Tactics
Helpful advice for making the most of this Guide

  • Try asking for all or a portion of payment up front.
  • Create a detailed "aging schedule" for your receivables. Call overdue accounts quickly, focusing on the largest amounts first.
  • Offer a discount for overdue amounts, but only after you've pressed for full payment. Set a short deadline and make it sweet enough to draw a response.
  • Prepare invoices in advance and send them out at the earliest possible moment.

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