Finding money within your business – Part Two

Find, Money

Following on from Part One of Finding money within your business, here are some more ways you can free up funds to address those cashflow problems.


Do you have excessive capital tied up in stock?  This can occur in two ways:

  • carrying high levels of items that you could obtain from suppliers at short notice
  • having too many slow-moving items (and too few fast-moving items).

A quick sale?

Review regularly your stock levels, your stock turnover rates and your purchasing policies.

Can you free up money by reducing stock?  What about moving out of the slower-moving lines or having a quick sale of dust-collecting stock? It might pay you to reduce some items quite heavily to get some money in quickly.

Can you approach suppliers to take back any excessive stock you may have ordered?  They might help you out of a temporary tight corner as a goodwill gesture if you explain you have a temporary cash flow crisis, but that you do wish to build a long-term relationship with them.

If you need additional funds to purchase more stock, make sure that you’re replacing slow-moving stock with the faster selling lines.

Pre-paid expenses

This is another area you could look at.  These pre-paid expenses often relate to services.  For example, you might pay your insurance bill for the year all in one hit, but you could arrange to pay small monthly amounts.  There might be an additional cost for doing this, but you must weight the extra cost against the advantages of 12 small payments which your cash flow can comfortably handle versus one large annual payment.

Try a similar approach with your accountant.  Instead of facing a substantial bill once a year, ask if you can pay a set amount monthly.


Assets can drain significant amounts of cash out of a business.  Do you really put all your assets to full use?  You might be able to:

  • Sell off little-used assets and hire suitable replacements when you require them.
  • Lease or rent assets and equipment that depreciates rapidly such as computers and or vehicles


CustomersDon’t forget your customers can be a source of business funds. Apart from debt collection improvements already discussed, try these tactics:

Here’s a ‘thinking outside the square’ tactic.  Ask some of your credit customers (start with the ones you know best) if they would be willing to use their bank credit cards for purchases from you, instead of using the account facility they have with you.  For example, if they purchase say $2,500 worth of goods or services from you, they would pay for this by means of a business credit card.

They still get 30 to 55 days credit before having to pay the credit card company, but you get your cash as soon as you sent in the voucher to the bank.  You have to pay the (around) 5% commission, but otherwise it’s almost as good as a cash transaction.

If you’re starting a new business, consider establishing it on a cash only basis to keep the funds inside your business rather than locked up in Accounts Receivable.

Ask for progress payments

If you supply goods over a period of time, or if you’re a service business, ask if you can invoice for progress payments.  This is quite a common method of ensuring you get some cash flow during a project instead of waiting until the end of a project or delivery period to invoice—and then still waiting at least another 30 days for payment.

There’s another benefit here too.  If the customer turns out to be dodgy, you’ll discover this quite early on instead of at the end and you can cut your losses before they mount up and perhaps drag your business down.  This tactic is therefore very suitable for tradespeople subcontracting to a developer.


Suppliers, Wee man

Finally, consider your suppliers as a possible source of funds.  Ask for extended payment terms to give you the opportunity to sell the goods first before you have to pay.  If the supplier won’t budge, try this tactic: split the order in two and offer to pay normal credit terms (30 days) on the one half of the order and 90 days on the other half.

Your suppliers will be more likely to agree to this kind of arrangement if you’ve paid them promptly in the past. After all, they have a vested interest in helping you succeed.

  • Quantity breaks – incentivise customers to order more through quantity discounts.
  • Re-order levels – Setup minimum stock levels to avoid stock outages on important lines.
  • Default reorder quantity – Setup re-order quantities so the most economic order quantity is placed.
  • Receive Stock – Receive items into stock so you can sell them before receiving the final bill

Take advantage of discounts

Pay accounts that give discounts on time.  This is an easy one.  If any suppliers offer a discount for early payment, then take it (and there is no harm in asking for a discount).

These are just suggestions and may not be suitable for your business.  Feel free to contact us about ways to find money in your business.