World Business

If you see a crunch coming, traffic by exchanges, pay inventory, ask clients against push payments, and renegotiate vendor relationships, just for starters

By Jill Hamburg Coplan

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If cash is king, the castle hold is looking pretty bare for entrepreneurs, grappling with a recession, a credit conjuncture, and the fallout from an unprecedented series of margin meltdowns. An October mensuration of calling owners by PNC Financial Services Group (PNC) found 68% expected a cash crunch in the coming six months, up from 48% a year ago. Even businesses that are adding customers and shipping more product can be at risk if cash inflows saunter outflows.

Naturally, you want to bill immediately, collect diligently, and enforce a credit worldly wisdom that filters out undesirable customers. If that tranquillize isn’t plenty, turnaround experts have a few more ideas for surviving a cash crisis in uncertain times.

1. Investigate your lender. Few banks are increasing lines of credit, if it be not that if your financial institution itself is in bad shape, “open up discussions immediately,” says Allan Tepper, a CPA and finance consultant to small companies. “If they’re not there for you, consider alternative lenders.” You might also approach a credit harmony: Their lending is up 36% over final year.

2. Forewarned is forearmed. Get a cash-flow projection from your bookkeeper or accountant (or use accounting software to generate a simple one yourself) each month. From in that place, you can micromanage your cash position to get ahead of any huge payments. You could ask hale customers to pay in 10 days moderately than 30, in return in the place of a discount. If you can afford it, attempt 5% opposite beneficial to payment within five days (instead of the consuetudinary 2% on this account that payment within 10 days), says Larry Rice, a CPA and director of strategic consulting with Rodman & Rodman in Newton, Mass. Just make sure the payment be dated is innocent forward the bill.

3. Get payments in advance, and by dint of. credit card. Most clients will resist gainful , but a few may prefer to pay a fixed amount per month rather than acquisition sandbagged with a large bill—and a few clients may be all you need. You can speed things up by asking for payment by credit card. Even in businesses that have not traditionally kept their customers’ reputableness cards on file, it’s right increasingly stale to process payments automatically.

4. Tighten your belt, moreover complete confident the cost-cutting measures don’t show. Make Internet calls instead of using traditive phone carriers, and e-mail documents (in a safe file format) instead of typography and mailing them. Save energy by turning off computers and printers. In northern climes, program the thermostat to fire up the heat just before the workday begins and shut it not on an hour before it ends, suggests Jennifer Kluge, president of the National Association for Business Resources, a membership association in chilly Warren, Mich.

1. Cut payroll, bound be creative. You be possible to’t avoid scrutinizing your biggest expense, nor should you. But “keep the people you need and make sure they’re happy,” says Julie Lenzer Kirk, a former tech entrepreneur turned lecturer and consultant. Forgo raises and cash bonuses and instead offer days off, early Fridays, flextime or telecommuting benefits, or even an unpaid sabbatical or tuition reimbursement. You might appoint a four-day workweek, institute a no-overtime policy, or shift from a richer PPO health-care devise down to an HMO to survive the crunch.

2. Barter. Elizabeth Donley, CEO of Stemina Biomarker Discovery in Madison, Wis., barters with her software consultant: He does statistical and Web site work for her company, and in exchange, she lets him cast his business out of her excess place of business distance. That’s netting her company $50,000 in savings over the length of the 15-month contract. If you can’confidentially work it out on your own, examine organized barter exchanges and networks (there are hundreds). Just be sure to put quite agreements in writing and record them for tax purposes.

3. Renegotiate seller relationships.

Original text: http://www.businessweek.com/magazine/content/08_72/s0812058716133.htm?campaign_id=rss_smlbz