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Almost all businesses go through periods of distress.
Your lifeline, cash, becomes tight and could threaten the existence of your business.
Here are 25 unconventional ways to find cash in your business.
(p.s. many of these I took from @jeff05251 book, highly recommend it)
Your lifeline, cash, becomes tight and could threaten the existence of your business.
Here are 25 unconventional ways to find cash in your business.
(p.s. many of these I took from @jeff05251 book, highly recommend it)
#1 – Raise Prices
You might be underestimating your pricing power.
Customers, especially long-time loyal ones, may not be want to go through the hassle of finding a new supplier over a 5-10% price increase.
It also helps LTV:CAC ratio for eCommerce. https://twitter.com/jayvasdigital/status/1272511873049600002?s=20
You might be underestimating your pricing power.
Customers, especially long-time loyal ones, may not be want to go through the hassle of finding a new supplier over a 5-10% price increase.
It also helps LTV:CAC ratio for eCommerce. https://twitter.com/jayvasdigital/status/1272511873049600002?s=20
#2 – Collect Accounts Receivable Faster
Let overdue accounts know that they will lose their credit terms if they don’t pay ASAP.
You could also offer small discounts for any account that isn’t overdue if they pay ASAP. Something around 1% to 3% would be typical.
Let overdue accounts know that they will lose their credit terms if they don’t pay ASAP.
You could also offer small discounts for any account that isn’t overdue if they pay ASAP. Something around 1% to 3% would be typical.
#3 – Collect Upfront (COD) or Take A Deposit
Require all new orders to paid-in-full upfront
If you’re not comfortable doing this, you can simply take a cash deposit upfront on all new orders. An amount of 10% to 50% of the order, would be reasonable.
Require all new orders to paid-in-full upfront
If you’re not comfortable doing this, you can simply take a cash deposit upfront on all new orders. An amount of 10% to 50% of the order, would be reasonable.
#4 – Get Factoring on Accounts Receivable
If #2 and #3 fail, a factoring company will give you cash upfront for unpaid invoices, and charge a fairly hefty fee.
eCommerce companies have access to @Clearbanc, which works in a similar fashion https://jayvas.com/everything-you-need-to-know-about-clearbanc-financing-model/
If #2 and #3 fail, a factoring company will give you cash upfront for unpaid invoices, and charge a fairly hefty fee.
eCommerce companies have access to @Clearbanc, which works in a similar fashion https://jayvas.com/everything-you-need-to-know-about-clearbanc-financing-model/
#5 – Take Preorders For A New Product
If you have a new product in the pipeline, start taking preorders from customers. You can offer them a discounted price, a preorder special.
@elonmusk has famously done this many times for various products.
If you have a new product in the pipeline, start taking preorders from customers. You can offer them a discounted price, a preorder special.
@elonmusk has famously done this many times for various products.
#6 – Run a Sale
Run a limited-time sale to drum up some quick cash. This works well especially if you don’t normally run sales.
eCommerce businesses can use @klaviyo to strategically target customers that haven’t purchased from you in a while.
Run a limited-time sale to drum up some quick cash. This works well especially if you don’t normally run sales.
eCommerce businesses can use @klaviyo to strategically target customers that haven’t purchased from you in a while.
#7 – Increase Delivery Times
This works for eCommerce businesses, where you're paid upfront.
If you normally promise customers that they’ll receive their product in 3-5 business days, increase it to 5-10 business days. This will keep cash in your business a few days longer.
This works for eCommerce businesses, where you're paid upfront.
If you normally promise customers that they’ll receive their product in 3-5 business days, increase it to 5-10 business days. This will keep cash in your business a few days longer.
#8 – Increase Refund Times
Rather than issuing cash refunds immediately to customers, implement a policy where refunds will be issued after a certain time period.
Something between 5 to 10 business days could work. This will slow the departure of cash from your business.
Rather than issuing cash refunds immediately to customers, implement a policy where refunds will be issued after a certain time period.
Something between 5 to 10 business days could work. This will slow the departure of cash from your business.
#9 – Eliminate Refunds or Offer Store Credit Only
If #8 doesn't help, you could change your refund policy to the final sale on everything or offer store credit only.
Depending on your customer refund rate, this could drastically reduce cash departing from your business
If #8 doesn't help, you could change your refund policy to the final sale on everything or offer store credit only.
Depending on your customer refund rate, this could drastically reduce cash departing from your business
#10 – Pay Accounts Payable Slower
Call your vendors ahead of time, let them know cash is tight and that you’ll be a few days late.
Make them feel comfortable by letting them know it’s temporary, and you’re actively working on resolving things back to normal.
Call your vendors ahead of time, let them know cash is tight and that you’ll be a few days late.
Make them feel comfortable by letting them know it’s temporary, and you’re actively working on resolving things back to normal.
#11 – Buy Inventory on Consignment
This will allow you to continue to sell without having to buy anything up front.
Your supplier will have ownership over the inventory, until it sells, but it will free up cash.
This will allow you to continue to sell without having to buy anything up front.
Your supplier will have ownership over the inventory, until it sells, but it will free up cash.
#12 – Ask Vendors For More Credit or Better Terms
If you currently have a $50,000 credit limit, ask to increase to $75,000. Or ask to increase your net 30 terms with a vendor, ask for net 45 terms.
If you currently have a $50,000 credit limit, ask to increase to $75,000. Or ask to increase your net 30 terms with a vendor, ask for net 45 terms.
#13 – Ask Vendors to Convert Accounts Payable to Long Term Debt
Rather than paying your vendor invoices that are outstanding, ask if you could convert them into a long-term note with interest.
You could create a payment plan and a loan amortization table.
Rather than paying your vendor invoices that are outstanding, ask if you could convert them into a long-term note with interest.
You could create a payment plan and a loan amortization table.
#14 – Ask Vendors to Convert Accounts Payable to Equity
Similar to #13, but equity instead of debt.
You’ll need to sell your vendors on future profitability and what the company could be worth in the long run.
Similar to #13, but equity instead of debt.
You’ll need to sell your vendors on future profitability and what the company could be worth in the long run.
#15 – Move Retainers to Contingency
Move any performance-based professionals/contractors from fixed retainer to a contingency arrangement.
Show them how they will earn more money in a continent payment plan vs a fixed retainer. This will save you some cash in the short term.
Move any performance-based professionals/contractors from fixed retainer to a contingency arrangement.
Show them how they will earn more money in a continent payment plan vs a fixed retainer. This will save you some cash in the short term.
#16 – Accrue Contractor Fees
If #15 doesn’t work, ask contractors/professional service providers if you could accrue their fees on your books. You'll pay it later once cashflow improves.
You can entice them by offering a little bit of interest on the amount owed.
If #15 doesn’t work, ask contractors/professional service providers if you could accrue their fees on your books. You'll pay it later once cashflow improves.
You can entice them by offering a little bit of interest on the amount owed.
#17 - Require Approval For All Payments
Often times, the accounting department is trying to preserve cash while the purchasing department keeps buying.
Lower approval thresholds for payments.
Often times, the accounting department is trying to preserve cash while the purchasing department keeps buying.
Lower approval thresholds for payments.
#18 – Sell Equipment
If you have any unused or under-utilized equipment, sell it.
With online marketplaces like eBay, Craigslist, and Facebook Marketplace, you’d be surprised how quickly you can get rid of stuff.
If you have any unused or under-utilized equipment, sell it.
With online marketplaces like eBay, Craigslist, and Facebook Marketplace, you’d be surprised how quickly you can get rid of stuff.
#19 – Sell or Return Inventory
Inventory can be one of the largest sources of cash drain in a physical goods business.
Al these methods might harm your margins, and force you to take a steep loss, but could generate cash very quickly.
Inventory can be one of the largest sources of cash drain in a physical goods business.
Al these methods might harm your margins, and force you to take a steep loss, but could generate cash very quickly.
#20 – Sublease Parts of Your Business
Do you have extra office/warehouse space? Empty parking spaces? Equipment or company vehicles you’re not using?
Try subleasing to generate some cash. You can work out a month-to-month contract where you are able to terminate upon notice.
Do you have extra office/warehouse space? Empty parking spaces? Equipment or company vehicles you’re not using?
Try subleasing to generate some cash. You can work out a month-to-month contract where you are able to terminate upon notice.
#21 – Sale-Leaseback
This works if your business has significant assets like real estate or large machinery.
Sell the asset, and arrange a long-term lease agreement with the new buyer.
This is a more long-term decision but this should free up significant amounts of cash.
This works if your business has significant assets like real estate or large machinery.
Sell the asset, and arrange a long-term lease agreement with the new buyer.
This is a more long-term decision but this should free up significant amounts of cash.
#22 – Try to Expedite Any Tax Refunds
If a tax agency owes you money, try getting on the phone daily to expedite the tax refund.
This can also work with #15. Incentivize your accountant with a contingency plan and pay them a % of the refund.
If a tax agency owes you money, try getting on the phone daily to expedite the tax refund.
This can also work with #15. Incentivize your accountant with a contingency plan and pay them a % of the refund.
Hit the Twitter thread limit.
For the remaining 3 and further reading on this, visit my latest blog post: https://jayvas.com/25-unconventional-ways-to-find-cash-in-your-business/
For the remaining 3 and further reading on this, visit my latest blog post: https://jayvas.com/25-unconventional-ways-to-find-cash-in-your-business/
