When your business is frequently facing problems with paying bills in a timely manner, it is likely you have problems with cash flow. You may have plenty of assets, but not have the cash to pay the bills when you need to. Here are some easy ways to ease the cash bind:
Leasing, rather than buying, can help to cut down on major cash expenditures. A lease is a contract to acquire fixed assets for payments over a specified period of time.
A Letter of Credit is a guarantee from a bank that a specific obligation will be honored by the bank if the borrower fails to pay. This type of letter is useful when dealing with a new vendor to establish credit worthiness. No funds are paid by the bank, but credit requirements must be met.
Barter is an agreement to exchange goods for services directly without money as a medium of exchange. As an example, you might barter something your company produces with another business that provides advertising or another product that you would like to purchase, but don't have the cash for.
An Accounts Receivable Loan allows you to get money from a lender as soon as you ship to or invoice the customer. This is a short-term loan that is secured by your accounts receivable. It operates much like an overdraft line from a bank.
In Factoring, you actually sell your accounts receivable to a factoring firm at a discount off the face value in order to obtain the cash right away.
Inventory Financing involves a short-term loan used to procure inventory (raw material or finished goods). The inventory is used as collateral for a loan.
Being able to pay your bills in a timely way is critical to your business' reputation. A good accountant can help you set up any of these methods for easing cash flow. If they are not sufficient, you may need a more global financial solution, such as selling part of your business, or obtaining a long-term loan. Financing Your Business gives a broader overview of the whole field of financing.
